ˆˇ˝˘ ˚ ˙ ˇ - Fujikura...2018/09/28 · Annual Report 2018 Year Ended March 31, 2018 ˜ ˚...

Annual ReportYear Ended March 31, 20182018

“Tsunagu”Technology

Annual Report

Year Ended March 31, 2018

2018

Fujikura Ltd.5-1, Kiba 1-chome, Koto-ku, Tokyo 135-8512, JapanTel: +81-3-5606-1030Fax: +81-3-5606-1502URL: http://www.fujikura.co.jp/eng

Printed in Japan

3Fujikura Annual Report 20182 Fujikura Annual Report 2018

Table of Contents

“Tsunagu” Technology .....................................................2

Fujikura’s History ................................................................4

President’s Message .........................................................6

At a Glance ...........................................................................8

Financial Highlights .......................................................10

Progress of 2020 Mid-term Business Plan ............12

Company Profile .............................................................16

For the future ...................................................................23

R&D Activity for Future Growth ................................24

New Business Development ......................................26

Open Innovation.............................................................28

Sustainability Targeted by the Fujikura Group ...30

Corporate Social Responsibility ................................32

Top Management ...........................................................35

Corporate Governance .................................................36

Risks .....................................................................................39

Financial Section .............................................................41

Management Discussion & Analysis .......................42

Financial Review .............................................................44

Global Network ...............................................................74

Main Consolidated Subsidiaries/ Investor Information .................................................... 75

3

Fujikura Group Corporate Philosophy

MissionThe Fujikura Group’s mission is to create exceptional value for

our customers around the world using “Tsunagu”

(the Japanese word meaning “connecting”) technologies.

We dedicate ourselves to providing exceptional products and solutions earning

our customers’ trust and contributing to society.

Vision Fujikura’s vision is to be the most trusted partner in our markets, to

continuously develop innovative and relevant products and solutions, and to positively impact our communities.

We strive to become the leading player in our markets by utilizing our “Tsunagu” technologies, tirelessly developing innovative and useful products and solutions.

Each individual within the company will endeavor to become an essential player, thus developing a team that can truly help Fujikura make its mark on the world stage.

Core Values Customer Satisfaction “Are you doing enough to ensure customers are perfectly satisfied?” Change for the Better “Are you willing to take up challenges to drive progress?” Collaboration “As a Fujikura associate, are you driven to work together with others to deliver

the best possible result for our company?”

Behavior Standards Always consider the customer first. Make customer satisfaction your highest

priority. Consider what to accept and what to reject. Identify and demonstrate clear goals. Stay ahead of emerging technologies and connect people and solutions to

the communities we serve. Choose your actions based on facts.

“Tsunagu”Technology

4 5Fujikura Annual Report 2018 Fujikura Annual Report 2018

Begi

nnin

g

1883 November 3 Zenpachi Fujikura goes to see a

demonstration of the arc light on the balcony of the postal service and telegraph office on Nihonbashi-dori with his youngest brother, Tomekichi, and takes an interest in electricity.

1885 Zenpachi Fujikura begins manufacturing silk and cotton insulated winding wires.

1886 Tomekichi Fujikura travels to USA.

Esta

blis

hmen

t

1890 Tomekichi Fujikura returns from the USA.

1893 Launch of manufacture of first rubber-insulated wires in Japan.

1901 Founder, Zenpachi Fujikura passes away (59).

Reorganization as an unlimited partnership named Fujikura Electric Wire & Rubber Co., Ltd. was founded.

Representative: Tomekichi Matsumoto

Capital: 25,000 yen1903 Appointment of Fujikura plant as

a Japan’s first rubber-insulation factory by the Department of Communication.

1910 Establishment of Fujikura Electric Wire Corporation.

Representative: Tomekichi Fujikura

Capital: 500,000 yen1916 Launch of copper refining, rolling

and wiring operations.1918 Acquisition of the patent for

multi-layered rubber-insulated wires.

1919 Established “Fujikura Gakuen”, a special facility for mentally-challenged children, on Oshima island.

Rest

orat

ion

afte

r the

Ear

thqu

ake

and

Fujik

ura

of T

echn

olog

y 1923 Completion of the Fukagawa head office and plant.

Total destruction of the Fukagawa head office and plant by fire in the aftermath of the Great Kanto Earthquake.

1925 Delivery of 1200 mm twisted pair cables made of domestically manufactured insulated paper to the Department of Communication.

1930 Launch manufacturing of unit-type city cables.

1931 Launch manufacturing of “Tokosen”, Japan’s first electric wire for aircraft.

Fujikura’s History

The diversification and globalization of its business led Fujikura to establish many overseas locations from the 1980s to the present. The Fujikura Group currently operates 139 companies in 29 countries.

Of particular note is Fujikura Electronics (Thailand) Ltd., which is part of the Electronics Business Company and was established in 1984. Since that time, the Kingdom of Thailand has been one of Fujikura’s main manufacturing locations. It was damaged by flooding in 2011, but Fujikura succeeded in restoring operations within a short period of time.

Fujikura’s Automotive Products Company has kept pace with the global expansion of our customers by establishing and operating locations overseas.

Post

war

and

hig

h ec

onom

ic g

row

th p

erio

d

1945 Complete destruction of Fukagawa plant in Tokyo Air Raid.

1949 Delivery of Japan’s first 24-core TV camera cables to NHK (Japan Broadcasting Corporation).

1957 Launch of wiring harness manufacturing.

1958 First-time delivery of 154 kV OF cables to Tokyo Electric Power Co., Inc.

Establishment of Tama Fujikura Gakuen.

1964 Development of equipment for the manufacture of SZ-twisted telecommunications cable.

1965 Launch manufacturing of printed circuits using a die stamp method.

1968 Relocation of head office to the Kasumigaseki Bldg.

Peri

od o

f uph

eava

l and

har

dshi

ps

1975 Joint optical fiber research agreement signed by Nippon Telegraph and Telephone Public Corporation, Furukawa Electric Co., Ltd., Sumitomo Electric Industries, Ltd. and Fujikura.

Development of Japan’s first flat-type elevator cables.

1976 Development of world’s first long-wavelength/ultralow loss optical fiber in cooperation with Nippon Telegraph and Telephone Public Corporation.

1977 Relocation of the head office to the Fujikura Bldg. in Gotanda.

1979 Launch manufacture of FPCs for electronic devices.

World’s first transmission loss of only 0.27 dB/km achieved with a low-loss single-mode optical fiber.

1980 Development of single-mode optical fusion splicers.

1981 Development of heat pipes for snow melting.

Development of Japan’s first OPGWs (Optical Fiber Composite Overhead Ground Wire).

1982 Development of semiconductor pressure sensors.

Launch of membrane switch manufacturing.

1983 Delivery of optical fiber for the Pan-Japan (longitudinal) optical fiber transmission line.

1985 Development of the world’s first core alignment fusion splicer.

1987 Successful fabrication of oxide superconducting wires.

1988 Development of world’s first CS trolley wires.

Development of world’s first multi optical fiber fusion splicers.

1990 Development of EDFA (erbium-doped optical fiber amplifier).

Completion of New Fukagawa Head Office Building.

Glo

baliz

atio

n ne

wte

ch

1992 The corporate name changed to Fujikura Ltd.

1993 Delivery of 500 kV CV cables and Hokkaido-Honshu optical fiber integrated submarine cables.

1995 Development of super low loss multi-fiber optical connectors.

1998 Delivery of World’s largest 500 kV DC OF submarine cables to Kansai Electric Power Co., Inc. and J Power (Electric Power Development Co., Ltd.)

Development of the first recyclable, ecological electrical wire in the world.

1999 Development of a new signal cable for the “Shinkansen” bullet train.

2000 Completion of a major urban redevelopment project on the site of the previous Fukagawa Plant, and opening of the “Fukagawa Gatharia” complex.

2001 Commercialization and marketing of FTTH optical fiber products.

Development of a seat sensor for automobiles.

2002 Live wire insulation diagnostic device for high-voltage CV cables wins Shibusawa Award.

Delivery of cables for a deep-earth exploration vessel.

2003 Development of dye-sensitized solar cells.

2004 Delivery of cables for ultra-high speed elevators.

Peri

od o

f maj

or g

loba

l com

peti

tion

2005 Adoption of corporate philosophy: “MVCV (Mission, Vision, Core Value)”

Establishment of Fujikura Dia Cable Ltd. in a joint venture with Mitsubishi Cable Industries Ltd.

2007 Shatters the critical current record with an yttrium-based oxide superconducting wire.

2010 Completion of ‘Fukagawa Gatharia’ (Fukagawa re-development project)

Open “Millennium Woods”, Fujikura Bio-Garden.

2011 Damage from floods in the Kingdom of Thailand.

2013 Introduction of in-house company system through organizational restructuring.

2015 Establishment of AFLIG, LLC, a company in the U.S. that manufactures and sells optical fiber splicing products.

The VAD method is recognized as a milestone by the IEEE.

2016 Consolidation of all manufacture and sale of industrial electrical wire in Fujikura Dia Cable Ltd.

2017 Switch to a Company with an Audit & Supervisory Committee Structure.

Founder, Zenpachi Fujikura

In November 1883, Zenpachi and his brother went to see

the arc light demonstration held on Nihonbashi-dori. They

subsequently embarked on the electrical wire business after

noticing the similarities in braiding technology for the hair

ornaments in Zenpachi’s home business and the insulation

for electrical wire.

Over the more than 130 years since then, Fujikura has

been the first to succeed in many things, both in Japan

and worldwide. Fujikura was the first company in Japan to

manufacture of rubber insulation for wires and “Tokosen”

electrical wire for aircraft prior to the war, then was the

first to discover the ultra low-loss area of the optical fiber

sector after the war. This achievement by Fujikura and other

companies was recognized as an IEEE Milestone.

Contributing to the prosperity of society by supplying

highly reliable products to the world through innovative

technologies, and maintaining high product quality

through the unbroken succession of exacting standards of

monozukuri (craftsmanship) from our predecessors is what

has ensured a relationship of trust between Fujikura and its

customers right up to the present.

This is the point from which Fujikura started and by

which it lives today.

Fujikura Annual Report 2018Fujikura Annual Report 20186

President’s MessageI ask all of our stakeholders to take a look at the substantial change

and growth that Fujikura is achieving through the 2020 Mid-term

Business Plan and ask your continued support.

7

To Our Shareholder,

Since Fujikura was founded in 1885, we

have developed a strong awareness of

contributing to the community through

our business. We do this by contributing

to the development of the infrastructure

business in Japan and many countries and

regions throughout the world, based on

the “tsunagu” (connecting) technologies

we have developed in our power and

telecommunications systems businesses.

The concept of contributing to growth

strategy and the community through

ESG is drawing interest, but the thought

process behind that concept is something

that we have lived and breathed since the

company’s founding, and it is stated in our

corporate philosophy. The value ascribed

to compensation for solving social

challenges through our business is the

source of our profits. We work hard to earn

those profits and use them to fund our

work as we take on new social challenges.

The goal of management based on

high earning power and the power of a

strong reinvention, which I talk about

incessantly, is to continuously increase

earning power. We cannot contribute to

the community without earning power.

To achieve that we are working to

increase the earning power of each

in-house company while keeping the

achievement of an operating margin of

7% or higher firmly in sight as one of the

goals in the 2020 Mid-term Business Plan.

To give specific examples, our ability

to build a strong relationship of trust

with customers through the provision of

high value-added products such as SWR/

WTC in the Power & Telecommunication

Systems Company and by improving and

maintaining high quality in the Electronics

Business Company has given us the

opportunity to participate in business

from the launch of new models and to

provide highly sophisticated products

that add a high degree of value.

The existing business in the

Automotive Products Company is

struggling, but I think that we can propose

new solutions for the next-generation

electric vehicle (EV) market that will

materialize in the near future through the

combination of technologies derived from

our base business in components, sensors,

optical communications technology,

and other technologies that Fujikura

has developed itself. We will focus on

developing technologies of value to all of

our four in-house companies.

I would like to focus on increasing

our capabilities in proposing solutions

to customers and entry into more

business segments where Fujikura can

add a high degree of value. We will also

manage with a focus on ROIC (return

on invested capital) in our existing

businesses and I think it is essential to

engage in a thorough process of selection

and concentration in businesses where

Fujikura’s standing has deteriorated

significantly on a routine basis.

Meanwhile, I think the most urgent

challenge facing our company is the

power of reinvention in the face of

change. While we pride ourselves on

the fact that we have been able to exist

and prosper as a company for more than

100 years, Fujikura’s continued survival

is not assured unless we respond to the

unprecedented speed of change in the

business and social environment brought

about by the proliferation of ICT.

We have been pursuing initiatives in

open innovation since last year, a concept

raised in the 2030 Vision, to strengthen

our response. This year we are taking a

series of steps to build an innovation hub.

Stated differently, this means that we are

working to change the mindset of the

company itself.

We have narrowed our focus to four

segments because we believe that we

cannot demonstrate Fujikura’s strengths in

areas far removed from its existing areas

of business.

(1) Energy & Industry

(2) Advanced Communication

(3) Life-Assistance

(4) Vehicle

This is an attempt to create new

businesses in these four segments by 2030

and we will accomplish this through open

innovation and stepping away from being

wholly self-sufficient.

Our goal is to develop a corporate

culture that enables a continuous process of

selection and concentration and reinvention

of change.

I ask all of our stakeholders to take a look

at the substantial change and growth that

Fujikura is achieving through the 2020 Mid-

term Business Plan and ask your continued

support.

Masahiko ItoPresident & CEO

Bridge to the futureThe value ascribed to compensation for solving social challenges through our business is the source of our profits.


20%Japan: ¥277 billion

Asian countries: ¥174 billion

U.S.A: ¥141 billion

Others: ¥147 billion

Net SalesTotal

¥740 billion

37%

24%

19%

P

ower & Telecommunication Systems Electronics Business

¥195 billion

Automotive Products

¥157 billion

¥371 billi

on

Net

Sal

es

¥22 billion

Ope

ratin

g In

com

e

¥10 billion

¥–3 billion

Real Estate Business & Other¥14 billion

Real Estate Business & Other ¥4 billionReal Estate Business & Other ¥4 billion

At a Glance

Overseas Sales Ratio

Net Sales: ¥740 billion

Ratio of Operating Income to Net sales: 4.6%

10 Years of Business Trend

0

100

200

300

400

500

600

700

800

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

0

5

10

15

20

25

30

35

40

45

Lehman Shock Earthquake in Japan Flood in Thailand

(Billions of yen) (Billions of yen)

0

18 16

13

6

20

25

574

504 521 509 491

590

661678 653

740

Power & Telecommunication Systems (Power Systems)

Electronics Business

Others

Power & Telecommunication Systems (Telecommunication Systems)

Automotive Products

OP

3234 34


0

100

200

300

400

500

600

700

800

Net Sales

(Billions of yen) (Billions of yen) (Billions of yen)

FY2014 FY2015 FY2017FY2016

Japan Asian countries U.S.A Others

Overseas Sales Ratio

FY2017FY2015 FY2016

284.6

168.9

90.0

89.5

FY2014

271.5

153.5

75.8

269.5

164.5

118.4

95.5

256.0

158.5

148.8124.4

114.8

277.2

174.3

141.3

147.0

Rate of Return on Equity

8.7%

(%)

Net Income (Loss)-Primary

64.36 yen

Number of Employees

58,422

(Billions of yen)Net Sales

(Billions of yen)Operating Income

0

100

200

300

400

500

600

700

800

FY2014FY2013 FY2013

FY2017FY2015 FY2016FY2014FY2013 FY2017FY2015 FY2016FY2014FY2013

FY2013 FY2015 FY2017FY2016

740.0

Operating Income

0

5

10

15

20

25

30

35 XXX34.334.3

590.9

661.5 678.5678.5653.7

20.3

25.0

32.634.234.234.2

0

2

4

6

8

10

(Yen)

2014 2015 2016 2017 20180

10

20

30

40

50

60

70

80

Japan Asia (excluding Japan) North & South America Europe & Africa

+1.4

34.2 34.3

(5.7)+2.5(0.4)

+2.2

Other

FY2016Results

FY2017Results

FY2018Forecast

FY2016Results

FY2017Results

FY2018Forecast

E�ect ofReorganization

of DomesticElectric

Wire & CableSales

Company

Power &Telecommunication

SystemBusiness

Power & Telecommunication

Business

86.2 higher than FY2016

Other

Other

Other

(0.3)

740.0

750.0

10.0 higher than FY2017

0.1 higher than FY2016 4.7 higher than FY2017

E�ect of Forex

E�ect of Forex

(21.4)E�ect of Rise in

Copper Price+2.4

(14.0) +12.0


+27.2

Automotive Business


Automotive Business

+4.0

E�ect of Forex

E�ect of Forex

Change indepreciation

method

+14.3

E�ect ofRise in

Copper Price

Power & Telecommunication

Systems Business

(1.3)

+18.7


+35.6

Automotive Business


Automotive Business

+18.0

+0.9

653.7

(2.8)

39.0

+3.7

+2.2 (1.4)

+2.9

0

10,000

20,000

30,000

40,000

50,000

60,000

Financial HighlightsMillions of yen

Thousands of U.S. dollars

FY2013 FY2014 FY2015 FY2016 FY2017 FY2017

For the Year

Net Sales 590,980 661,510 678,528 653,795 740,052 $6,965,195

Operating Income 20,345 25,075 32,632 34,230 34,343 323,228

Net Income Attributable to Owners of Parent 3,328 12,201 11,317 12,900 18,359 172,791

Capital Expenditures 25,463 24,637 31,979 45,623 42,588 400,828

R&D Expenditures 14,654 15,226 16,210 15,614 16,291 153,327

At Year-End

Total Assets 537,281 577,567 552,678 588,626 638,055 6,005,224

Total Net Assets 207,242 234,527 217,981 224,546 241,961 2,277,280

Number of employees 53,409 52,452 54,114 56,961 58,422

Per Share Data

Net Income (Loss)—Primary ¥9.99 ¥37.93 ¥36.98 ¥44.61 ¥64.36 $0.61

Net Income—Fully Diluted – – – – – –

Cash Dividends 6.00 7.00 8.00 10.00 14.00 0.13


Progress of 2020 Mid-term Business PlanThird year of 2020 Mid-term Business Plan

Important year for determining the success of the 2020 Mid-term Business Plan

Ratio of Operating Income to Net Sales

Goals to be achieved in FY2020

• Ratio of operating income to net sales: 7.0% or higher

• Net sales: 900 billion yen

• ROE: 10% or higher

• D/E ratio: 40:60 (0.66 times)

1HFY2017

2HFY2017

1HFY2018

2HFY2018

FY2019 FY2020

(%)

2020 Mid-term Business PlanResults/FY2018 Forecast

3.0

4.0

5.0

6.0

7.0

8.0

5.4

4.9

5.4

4.4

6.2

4.7

6.2

Adjusted:5.8%

5.6

7.0

Forex rate(JPY/USD)

Copper(JPY1,000/ton)

110 550

105

2020 Mid-term Business Plan

FY2018 plan 780

Developing deeper ties with strategic customers

Accelerate new business creation

Open innovation

Management reform & business structural reform

■■ Developing deeper ties with strategic customers - Work to achieve greater business growth - Seize new business opportunities

■■ Strengthen the structure for promoting new business■■ Key areas

- Automotive related - Industrial machinery - Medical devices

■■ Supply the missing pieces of portfolios and value chains and create new value for customers■■ Speed up technology development, business development and business growth

■■ Response to Corporate Governance Code■■ Improve the quality and speed of decision-making in a diverse range of businesses■■ Strengthen the management base

1. Accelerate developing ties with customer by providing strategic products (SWR/WTC)2. Win customer trust with differentiating quality

1. Strengthen products, technologies, and solutions for which automobiles are the platform2. Work on the healthcare and fiber laser business

1. Open innovation that creates value - Work with accelerators for start-up business - Set up an innovation hub

1. Transition to a company with an audit and supervisory committee2. Enhance diversity of members on the Board of Directors3. Employ “Principles for Preventing Corporate Scandals” and full-fledged compliance4. Take ESG measures


■ Advancements in 5G and IoT and further accelerate FTTx, mainly in North America■ Hyper scale data centers reaching a level of higher density■ Solve lack of cable ducts and rise in requests for joint use of electrical poles

Fujikura automotive related products and technologies

Trend of high output

Shipment volume converted from optical fiber core length

Shipment volume converted from optical fiber core length

■ Earn the trust of customers by preventing mixing of defective products ⇒ Moreover, improve profit margins by further enhancing internal quality

■ Promote automation of manufacturing/inspections ⇒ Improve productivity by manpower saving

• Increase number of optical fiber cores that can be installed in one cable duct

• Effective use of existing facilities (no need for additional construction work)

• Thin, light weight cables ⇒ Easy installation, can lay long lengths of cable, compact drums (reduce transport cost)

Developing Deeper Ties with Strategic Customers Accelerate New Business Creation

▲

■Strengthen development capabilities of products, technologies, and solutions for automotive market

■

■ ■

Companywide provision of products and technological solutions to customers• Establish automotive product R&D center in the Corporate R&D Unit• Establish Fujikura Technology Europe GmbH in Europe

▲

■Business activities in the medical field■

■ ■

Core technologies are imaging and miniaturizingExample: Direct imaging technology in the body • Fujikura nearly covers all methods for invasive

imaging in detailed areas inside the body ⇒ Recommend optimal solutions to customers

(Small diameter CMOS imager, imaging fiber optics, OCT, endoscopic ultrasound)

• Extremely small diameter CMOS image sensor scope

⇒ Further strengthen solution proposals*OCT=Optical Coherence Tomography

▲

■Fiber laser business activities■

■ ■

■High output multi-mode fiber laser ⇒ High speed cutting, high quality cross sect

• Succeeded in achieving the highest standard for high power in the industry

• Achieved competitive prices

■Redefine Fujikura’s core technologies■Propose total solutions responding to

customer needs■Collaborations beyond the boundaries of the

businesses

Accelerate and strengthen measures leading up to

next mid-term plan

SWR/WTC

▲

■Accelerate developing ties with customers by providing strategic products (Spider Web Ribbon/Wrapping Tube Cable)• Secure further growth and pave way for the future• Upcoming opportunities for expansion in demand and become the defacto standard in the market

Electronics

▲

■Aim to achieve sound growth by strengthening bond of trust with strategic customers• Continue to implement business operations with quality as its framework• In addition to converting fixed costs to variable costs to address fluctuations in demand, we implement

manufacturing innovations through automation and IoT

Cable duct

FY2017 sales volume rose 2.8x YoY

Market is steadily expanding

FY2016 FY2017 FY2018

April2016

June2016

August2016

October2016

December2016

February2017

April2017

June2017

August2017

October2017

December2017

February2018

(*MH=man-hour)(pcs/MH) FY2016 average FY2017 average

13% improvementon annual average

Telecommunication Systems Power Systems

Electronics Business Automotive Products

Optical Fiber Technologies

Storage & Power Device Technologies

Fiber LASER

Heat sinkand

Heatpipe

Storage & Power Device Technologies

Metal Cable Technologies

Sensing Technologies

Thermal Technologies

Printed Device Technologies

Fiber LASERAOC

Superconductor

Coiltechnologies

Dye-sensitized Solar Cell

Fast Charging Connector for EV

CapacitiveSensor

System Power Supply for Automotive

MembraneSensing

Heat sinkand

Heatpipe

DMFC module

MillimeterWave (60GHz)

FPCApplication

HV/EV Products

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Company A

Companies B & C

Maximum output levels for products put out by other companies

1

10

100

Out

put k

W

Example: CMOS endoscopy camera with extremely narrow diameter of φ1.3mm

Comparison of cross section of optical cables


Targeting a Highly Profitable Business StructureFujikura is working to reallocate resources to high-growth areas and implement structural reform in its business to create a

business structure that is highly profitable and has a powerful reinvention. During FY2018 we will begin to reap the benefits

of those efforts.

Investment in data centers, mobile, FTTx, and other types of telecommunications infrastructure was robust in FY2017 and

demand for optical fiber grew, mainly in China and North America. We expect the global optical fiber shortage to persist in

FY2018 as well, and are working to add capacity for optical fiber and optical cable in light of these trends in demand.

Rapid growth in the electrical infrastructure market is projected in Myanmar and other countries in Southeast Asia and

Brazil and neighboring countries in FY2018. Fujikura will work hand-in-hand with partners in each country to pursue EPC

business (Engineering, Procurement, and Construction).

200200μm fiber for

ultra-high-Density WTC™ (Wrapping Tube Cable™)

Launched

6,9126,912-fiber WTC™ developed

25,00025,000 km of electrical cable for solar power generation

shipped (in Japan)

We will work to build a base capable of rapidly meeting the robust demand for telecommunications systems and increase our earning power as we complete the structural reforms, product differentiation, and production technology development begun last fiscal year.

Hideyuki Hosoya Senior Vice President & Member of the Board

Company Profile

Power & Telecommunication Systems Company

6,912- Optical Fiber Cable (SWR™/WTC™)Fujikura has developed Spider Web Ribbon™/Wrapping Tube Cable™ (SWR™/WTC™) with density highest in the world, small diameter, light weight and excellent workability. One WTC™ has 6,912 fibers which is the largest number ever in the world.

Ultra-High-Density SWR™/WTC™ Wiring SolutionsTogether with ultra-high-density SWR™/WTC™, we lined up closures and patch panels which offer higher capacity while being compact and less time for installation.

Low Wind-Pressure Low-Loss Overhead Transmission ConductorThe use of the polygonal structure reduces wind pressure and increases the aluminum cross-section. This reduces electrical

transmission loss and reduces the amount of CO2 generated from thermal power generation.

Net Sales and Ratio of OperatingIncome to Net Sales

(Billions of yen)

FY2015 FY2016

366.5

FY2017 FY2018Est.

Net Sales Ratio of Operating Income to Net Sales (%)

0

100

200

300

400

5.8%5.8%

3.9%3.9%

349.6349.6

6.0%6.0% 6.1%6.1%

362.6362.6371.7371.7

New Product Initiatives


Speed and Consistent EffortsDuring FY2017, Fujikura achieved substantial growth in FPC and connector sales, mainly to smartphone manufacturers, which are key customers. We captured the stronger-than-expected demand in the first quarter, despite the fact that this is normally a slow period with very low demand, and remained extremely busy until the fourth quarter, when the pace of demand decelerated. This resulted in full-year net sales of 195.9 billion yen and operating income of 10.4 billion yen, far outperforming the previous fiscal year. Analysis showed that the strong performance was not only due to growth in demand. It was also the result of labor-savings from the automation we have pursued to this point and steady improvement in productivity, which led to small but continual incremental increases in earning power.

FY2018 is the middle year of the 2020 Mid-term Business Plan and we regard it as an important year to put the company on-track for achieving the plan goals. We will work to improve yields and quality for FPC and connectors, and deepen customer relationships through rapid response. In other segments of the electronic components business, we will proceed with a process of selection and concentration to build a business structure capable of sustaining stable sales and profits, and will work to create products that will become the cornerstones of the next-generation. We will also actively pursue introduction of the latest technology, such as IoT and AI, and work to enhance our competitiveness and achieve our plan targets of 214 billion yen in net sales and 14.0 billion yen in operating income.

6 years have elapsed

since the major floods in Thailand

in 2011.

Business has recovered to pre-flood levels, and the number

of employees in operations is at 1/2

the peak level.

Company Profile

Electronics Business Company

FPC for Daytime Running Lights (DRL)LED lights mounted on FPC take advantage of the flexibility of FPC and offer a superior sense of design for daytime running lights (DRL).

Board-to-Board Connectors for Vehicles and Mobile DevicesFujikura developed board-to-board connectors to meet the demand for electronic control and miniaturization in vehicles and is expanding the variety in the product line-up. These highly reliable connectors have a lock mechanism to withstand vibration and prevent disconnection, and enable a more compact board mounting space.

Digital Ultra-Low Pressure Sensors (AL4 Series)Fujikura has developed a digital ultra-low pressure sensor. This product offers high-precision, ultra-low pressure detection (10 kPa or less) and is also capable of withstanding high pressure. It is used in respiratory medical equipment and industrial pneumatic equipment.

I assumed responsibility for the electronics business from this fiscal year. We will meet customer expectations through even greater unification of manufacturing locations and working to improve competitiveness and speed in making management decisions.

Ikuo Kobayashi Senior Vice President & Member of the Board

195.9

161.1

(Billions of yen)

FY2015 FY2016 FY2017 FY2018Est.

214.0



0

60

120

180

240

7.6%7.6%

156.7

4.8%4.8% 5.3%5.3%

6.5%6.5%

New Product Initiatives


Strong growth in the harness businessThe automotive products business recorded net sales growth of 23.9 billion yen (up 18.0% YoY) over last fiscal year to 157 billion

yen. The business had an operating loss of 3.1 billion yen as operating profit declined by 5.7 billion yen from last fiscal year,

due to higher costs accompanying an increase in employee turnover at our plants in Eastern Europe during the first half.

The establishment of the Automotive Electrical System R&D Center within Fujikura’s R&D division has enabled us to undertake

research that crosses beyond divisional boundaries. The center conducts research that is closely aligned with the customer

perspective to develop and commercialize next-generation automotive electrical systems.

We expect net sales in fiscal year ending March 31, 2019 to be on par with last fiscal year, despite the impact from yen

appreciation. Sales will be sustained by the launch of new vehicle models. We will work to improve productivity at our plants

in Eastern Europe and all three regions will work as one team to achieve growth in operating income.

62 Locations

19 Countries

Company Profile

Automotive Products CompanyNew Product Initiatives

Large-size Aluminum Conductor CablesFujikura has developed large-size aluminum conductor cables to reduce the weight of high-current circuits in EV/PHEV.We will start mass production of this cable from September 2018.

Ultrasonic Welding TerminalsWe have also developed ultrasonic welding terminals and a connection method to enhance the reliability of electrical connections between large size aluminum conductors and the copper terminals.

Seat Occupancy Sensors (for S-harness)The new seat occupancy sensor is installed on the spring located beneath the seat cushion material on top of the seat. It is more compact than existing sensors.

We will work to achieve strong growth in the automotive products business, mainly in the wire harness business, and will generate new businesses on the automotive platform that will form a bridge to the future and contribute to stable growth of the Fujikura Group.

Akira Sasagawa Senior Vice President & Member of the Board

0

60

120

180

FY2015 FY2016 FY2017 FY2018Est.

1.8%1.8% 1.9%1.9%

-2.0%-2.0%

157.0157.0

-0.7%-0.7%

158.3158.3133.1133.1135.8



(Billions of yen)

Automotive Products Company will expand globally to 62 locations in 19 countries (38 plants, 24 offices and CSC) in fiscal year ending March 31, 2019. We will build a corporate structure and profit structure capable of swiftly meeting the needs of our customers.

22 Fujikura Annual Report 2018

Maintaining a Structure that Provides Steady Income GrowthOur real estate business continues to achieve high occupancy rates and stable income owing to the advantage of locations

that are near to central Tokyo. Fiscal year ended March 31, 2018 saw growth in both revenue and profit from the acquisition

of one office building during the previous period. Operating income reached a record high of 5.5 billion yen. The plan for

fiscal year ending March 31, 2019 projects a decline in both revenue and profit arising from temporary vacancies caused by

the replacement of some tenants, but we expect results to rebound in fiscal year ending March 31, 2020 and beyond.

Operating margin:

44%

Total office rental space:

Approximately

107,000 m2

This year is the 18th anniversary since FUKAGAWA GATHARIA opened for business. We will utilize the operating experience we have accumulated over the years to improve and maintain the value of our assets over the medium to long-term. This business will provide a steady source of support for Fujikura’s main business.

Tetsu Ito Senior Vice President & Member of the Board FY2015 FY2016 FY2017 FY2018

Est.

10.910.1

(Billions of yen)

10.7

0

4

8

12

50.4%50.4%

45.8%45.8%

50.2%50.2%

10.6

44.3%44.3%



Company Profile

Real Estate Business Company

For the FutureSince it was founded in 1885, Fujikura has contributed to the development of society by providing highly reliable products to the world through advanced technology.

Possessing technology developed by Fujikura itself is what first made it possible to create new functions and new value, and enabled Fujikura to become a leader in the field of “tsunagu (connecting)” technology.

Having said that, we do not intend to rely solely on self-sufficiency in a world where technology is rapidly changing. The pursuit of advanced R&D capabilities and open innovation are essential to the sustainable growth of our company.

On the following pages, we describe initiatives that are aimed at the future and how we are approaching and pursuing R&D by Fujikura and open innovation. Please understand that both are essential and key to the sustainable growth of Fujikura.

We own a total of approximately 107,000 m2 of rental office space in five buildings, which is occupied by over 10,000 office workers.

With an operating margin of 44%, this business will contribute to a higher profit margin for the company as a whole, despite the decline in revenue and profit projected in the plan for fiscal year ending March 31, 2019.


Akira WadaExecutive Vice President & Member of the Board

R&D Activity for Future Growth

The Fujikura Group is securing technical superiority in its “tsunagu (connecting)”

technologies by strengthening and maintaining top world-class competitiveness

in the four underlying areas of technology that form the core technology base

supporting its “tsunagu” technologies. These four areas consist of optical, wireless,

electronic component, and electrical wire and cable technologies. We will work

to expand our technology in areas peripheral to this core technology base and

will develop new products and create new businesses that anticipate social

changes and customer needs and accelerate reinvention of these changes in the

five business domains of telecommunications, electronics, energy, automotive

products, and medical and industrial equipment.

We are also working to build a global research structure that will enable us

to engage in timely research and development targeted at global technological

trends and to actively pursue open innovation that makes maximal use of

external technology.

We are pursuing these R&D activities through company-wide research at one

research institute facility and two research centers (materials technology and

automotive technology) and through the individual development activities of the

R&D departments in each business division as we keep a broad perspective on the

markets and technologies we are targeting.

Advanced Technology Laboratory The laboratory conducts cutting-edge research in the four areas

of information and communications, energy, electronics, and

automotive technology, and also in intermediate areas that overlap

these. We continue to engage in research on new technologies

for future generations and activities aimed at creating attractive

products wanted by customers around the world.

Low-loss optical fiber coupling for silicon photonic devicesSilicon photonics that enables high-precision integration of various kinds of optical components on a silicon substrate is drawing interest as a lower-cost technology that will enable more miniaturization of higher performance components for optical communications. Fujikura has developed TEC fiber, a thin optical fiber that applies thermally expanded core (TEC) technology to connect silicon photonic devices and conventional single-mode optical fiber with low loss. TEC fiber reduces the loss caused by the lack of conformity between silicon waveguides and conventional single-mode fiber. The core expansion caused by electrical discharge during fusion splicing is able to reduce the loss due to attachment to conventional single-mode fiber. TEC fiber is drawing the interest of many people at academic conferences and other events in Japan and overseas, in addition to the Optical Fiber Communication Conference and Exhibition (OFC).

60 GHz millimeter-wave RF Module with High-gain Phased ArrayFujikura is working on development of an embedded wireless communication module that can transmit at high speeds over long distances in the 60 GHz band. The chief characteristic of this module is that it is capable of wide-area directional control of a high-gain, highly focused antenna beam by using a phased array beam forming function (technology that concentrates and beams radio waves in a specific direction). The ability of this EHF RF module to direct an antenna beam of approximately 7.5° in width at any angle between ±45° has been experimentally verified. It consists of an array antenna driven by a high-power phased array IC with 16 high-gain receivers and transmitters designed and installed on a multi-layer liquid crystal polymer (LCP) substrate that offers both flexibility and low loss.

Ultra-Low-Power-Consumption Multihop Wireless Sensor SystemThis system is an energy harvesting system consisting of dye-sensitized solar cells that offer superior generating power in low-light environments. It is installed in an autonomous power supply for sensor devices and the wireless component is equipped with a multihop function to simultaneously achieve multistage relay with ultra-low power consumption and a dramatically expanded coverage area, and greater redundancy by securing a by-pass route for communication data. It provides a sensing system that costs little to install and maintain, and that can be used for many purposes where application has previously proven difficult, such as for monitoring bridges and other infrastructure, for preventing disaster by monitoring the slopes in mountainous areas, and making it possible to build zero energy buildings (ZEBs) by monitoring and controlling the temperature, humidity, and lighting in rooms.

Research Fields

“Tsunagu” Technologies that make up the

Technology Platform

Opticalfiber

systems

Wirecomponents in

electronicequipment

ElectronicComponents

Electrical & Wire Cable

Industrialequipment

Electronics

Automotiveproducts

SensorsHeat pipes

OpticalFiber lasers

Image fibers

WirelessMillimeter wave modules

NW-SYS sensors

Automotive wireharnesses

High-temperaturesuperconductors

Coaxialcables

Industrialwiring

*Wafer and Board Level Embedded Package

Optical devicesOptical fusion splicersOptical componentsOptical connectorsOptical cablesOptical fiber

Electrical wireFPCWABE*Connectors

Medicalequipment

New

mar

kets

Exis

tin

g m

arke

ts

New

mar

kets

Exis

tin

g m

arke

ts

Telecommuni-cations

Energy

Research and Development Expenses by Segment(Billions of yen)

Automotive Products

1.4

ElectronicsBusiness

4.4

Power &TelecommunicationSystems

10.3

Total16.2

Silicon photonic waveguides

(MFD: 0.2 µm)

Spot Size Converter(MFD: 4 µm)

Thermal diffusion core

Fusion interface

TEC fiber (MFD: 4 µm)

Conventional single-mode fiber

(MFD: 10 µm)

Sensor station

Specified low-power radio

Wide-area coverage

Sensor node

LCP substrate

Antenna array

Signal circuits

Radiator plate


Development of Yttrium-based High-temperatureSuperconductive (HTS) Wire for Medical MRIs andOther ApplicationsFujikura has worked to develop mass production technology for longlengths of high-temperature superconducting wire for many years,and the company’s efforts have been highly appreciated in Japanand overseas. Yttrium-based high-temperature superconductingwire is promising for medical MRIs and other applications due thefact that it shows high performance in high magnetic fields without liquid helium. In fiscal year 2016, Fujikura was commissioned and subsidized the “Technology development to promote commercialization of HTS program” by the NEDO (New Energy andIndustrial Technology Development Organization). We are working to develop technology that improves performanceand increases productivity of Yttrium-based HTS wire.

Active Optical Cable (AOC) Contributes to Manufacturing Industry InnovationFujikura sells the active optical cable (AOC) that connects industrial cameras used in machine vision. We are making progress on achieving higher definition and increasing the data capacity of industrial cameras used for inspecting products, image monitoring, etc. on manufacturing lines. We are also making progress on increasing the speed of transmission along with these advances. The Fujikura optical camera link cables enable high-speed connection over long cable lengths due to optical communications technology. This was previously impossible with the existing metal cables and is contributing the expansion of applications for industrial cameras sought after amid the trend of innovation in the manufacturing industry.

Accelerating our ability to reinventionFujikura has been working on activities under the banner of our “power of a strong reinvention” growth strategy in our 2020 Mid-term

Business Plan and we will accelerate the speed of new business creation even further.

Medical business, High-temperature superconductors, Cloud communications

Tomoharu MorimotoExecutive Officer

The New Business Development Center is working to build a framework to commercialize

three areas and create new businesses. The commercialization is approaching about

three fields, Superconductor, Cloud communications, and Medical Devices businesses.

Fujikura has made substantial progress on manufacturing products that offer consistent

quality in the superconductivity business, and we are steadily approaching our goal of

commercialization. Due to the benefits of the integration of healthcare-related businesses,

there is also momentum in expanding sales of the Medical Devices business.

Open innovation is a key means of building a framework for new business creation.

Fujikura recognizes the importance of pursuing external partnerships, sharing our vision

with relevant partners, and working to enter into and expand mutual partnerships.

We believe that we can co-create value through collaboration that extends beyond

organizational and community boundaries to address many social challenges. We

therefore feel the need to build an ecosystem that is externally directed and will cooperate

with people who share our vision of identifying problems and solving them.

We are confident that we will be able to engage in even more robust action through

the BRIDGE Fujikura Innovation Hub, a new place created in 2018. We are certain that we

will be able to solve the problems likely to confront society in the future and address the

social challenges of the future through this place.

New Business Development

New Businesses

Advanced Communication Life-AssistanceEnergy & Industry Vehicle

Sharinginterests

Penetration&

Expansion

Creation&

Leap forward

2030 Vision

Medical devicesThrough detailed market research and analysis, we are concentrating on the business of parts and functional modules for medical imaging and miniaturization for medical device.Today, we build a framework from marketing to customers based on the medical devices quality management systems, and focus on new product lines such as OCT, micro endoscope and IC embedded circuit, which strongly appeals to global medical device manufacturers.


Open Innovation

Innovation Hub “BRIDGE” Established

Fujikura is now aiming to address the social challenges of the future.

The process of identifying challenges and resolving them is essential to achieving this.

How do we identify potential challenges in the world and find solutions to them?

“Diversity” is the key.

We come from different cultures, possess different technologies, and have different styles. By combining the ideas that arise from

these differences, we will begin to envision a future which we could not imagine.

BRIDGE is a venue where people can encounter new possibilities. It is a platform that enables people of all types and job descriptions to connect in many ways, from relaxing in the café to using the co-working space that provides opportunities to share information with one another and work collaboratively, and using the event space for many different kinds of seminars and other events.

Creww

Fujikura is entering many partnerships to accelerate open innovation.

Plug and Play Japan

Fujikura used Creww’s platform, the largest open innovation platform in Japan, to launch an open innovation program called the Accelerator Program with startups via public solicitation. We are currently working on experimental verification with four companies.

Plug and Play supports startups in Silicon Valley and worldwide. Fujikura has become a Japanese corporate partner and is taking on the challenge of creating new businesses by partnering with many startups around the world.

Partners to Accelerate Open Innovation

The 2030 Vision talks about business development and solving future social challenges in four market segments.

Open innovation is a useful way to achieve that. Fujikura will create new value and accelerate the company’s reinvention of

changes through open innovation.

We are beginning new initiatives unfettered by existing constraints through collaboration with highly innovative partners.

Meeting space

Collective discussion space

Free event space

Lounge

Co-working space

Management officeCafe


Sustainability Targeted by the Fujikura Group

Takashi Takizawa, Senior Vice President in charge of Corporate Staff Unit

The Fujikura Group is aiming to make great strides to become a company that creates value that will achieve a sustainable society and ensure continuous growth of the Fujikura Group. We aim to achieve this through creative business activities that contribute to the sustainability of the global community in which we do business.

It is based on these goals that we established the basic policy of our 2020 Mid-term Business Plan, which is to ensure responsible corporate governance while working on initiatives that contribute to the environment and society and working to increase the corporate value of the Fujikura Group. We will earn the trust of stakeholders and take concrete steps to build our community and value together.

Establishing a System of Responsible Corporate Governance To create a sustainable society, each company must respect the interests of the stakeholders affected by its own business activities and exhibit a sense of responsibility as a member of society. It is from this perspective that governments and stock exchanges have established a framework for monitoring fair business activities and ESG investment that evaluates the non-financial aspects of a company’s value has become increasingly popular.

To meet such social needs, Fujikura transitioned to a “company with an audit and supervisory committee” organizational structure to strengthen corporate governance in 2017. Fujikura clarified responsibilities, and delegated authority to executive directors in charge of the management of each in-house company to ensure swift decision-making in each

business. We also established a Nominating Advisory Committee and a Remuneration Advisory Committee to strengthen the supervisory function. A majority of the members on these committees are outside directors. We continue to maintain a high degree of transparency in business activities to ensure accountability to stakeholders under a governance system that separates the management and supervisory functions.

Active Participation in the United Nations Global CompactFujikura became a signatory to the United Nations Global Compact in 2013. We have committed to six priority targets in relation to the Sustainable Development Goals (SDGs), and are demonstrating creative leadership on problems faced by the international community.

We have formulated the Fujikura Group Long-term Environmental Vision 2050, which looks 30 years into the future,

based on these priority targets, and we are taking on four challenges to reduce our impact on the environment as part of this vision: 1) Zero CO2 emissions at plants by 2050, 2) Minimize use of water at plants and wastewater management, 3) Symbiosis between plant workers and nature, and 4) Effective use of resources and the resource cycle. We have established Millennium Woods biotope gardens as places that respect the importance of biodiversity and maintain a connection with local communities by planting rare plant species in gardens nearby or on the grounds of the head office and its plant locations so the abundance of nature there will continue to speak to future generations.

We are working to develop environmentally friendly products that excel in using fewer resources and less energy over the lifecycle of the products. In doing so, we assess the environmental performance over the entire process, from production to distribution and disposal.

Creating Shared Value through “Tsunagu (Connecting)” TechnologiesHarukichi Nakauchi, the younger brother of the founder, established Fujikura Gakuen, a facility for mentally challenged individuals, and Fujikura has continued to support it for more than 100 years. In emerging countries that we supply electrical and communications infrastructure to, we are offering a scholarship system and technical training for workers.

Fujikura has achieved a certain degree of recognition as a company that fulfills its responsibilities to society through CSR activities like these. To find the optimal solutions to the complex problems faced by the international community, though, we must simultaneously achieve growth in income for our own company and solve the problems of society. We will accomplish this by working to achieve sustainability of the global community through essential

corporate business activities and by creating shared value (CSV).

At Fujikura, we recognize that it is not enough to meet the needs of stakeholders. We need to actively work to achieve a sustainable society through business activities linked to this. We therefore positioned 2017 as the first year for Fujikura CSV and are pursuing initiatives in identifying and creating new value through open innovation. We are accelerating our evolution from an engineering group focused on the existing product output model to company that creates value by functioning as a platform for a sustainable society, as we engage in ongoing dialog with stakeholders.

Fujikura will continue to work to achieve a sustainable society and create shared value by providing “tsunagu (connecting)” solutions aimed at realizing a comfortable and sustainable society of the future.

Six SDG Targets Fujikura is Working Toward


Mapping SDGs and CSV Strategy as They Relate to the Value Chain

Engaging in a Dialog on CSV

Fujikura designated 2017 as the first year for CSV, the year in which

we began to take a fresh look and pay serious attention to business

activities aimed at providing solutions to social problems. As the first

step in this initiative, we invited an expert on CSV to help officers and

other employees understand CSV, and held a lecture and workshop in

August 2017.

Lector: Mr.Takashi Nawa

Appointed Professor of The Graduate School of

International Corporate Strategy (ICS),

Hitotsubashi University

Corporate Social ResponsibilityFujikura Group Initiatives Aimed at Achieving SDGs

SDG Priority Issues Specified

The three guidelines below were used to select six items for specification as priority issues:

(1) Clarification of the relationship between the four priority areas and CSR Priority Measures 2020 set forth in the Fujikura Group CSR

Basic Policy and the 17 Sustainable Development Goals (SDGs).

(2) Use of the Materiality Matrix method to consider each SDG from two perspectives, the degree of social concern and the degree of

impact on Fujikura’s business

(3) Mapping analysis of supply chain SDGs

Providing Solutions to Social Issues through Business Activities (CSV)In the Fujikura Group, we are pursuing Shared Value Creation (CSV) as a strategy for achieving profit growth for the company and

contributing to the achievement of SDGs. The group has consistently engaged in business activities designed to resolve social issues

up to this point, but Fujikura designated 2017 as the first year for CSV, the year in which we began to pay serious attention to CSV.

Enhancing positive impacts

R&DMaterials

procurement Manufacturing

Minimizing negative impacts

Internal education and striving for profit growth

Sales

CSV strategy that targets

resolution ofsocial issues

Creatingcustomer

value


President & CEO & Representative Director

Masahiko Ito

Executive Vice President & Member of the Board

Akira Wada

Senior Vice Presidents & Members of the Board

Director Full-time Audit & Supervisory Committee Member

Yasuyuki Oda

Director (Outside director) Audit & Supervisory Committee Members

Soichiro SekiuchiMasaaki ShimojimaKenichiro AbeYoshio Shirai

Masahiro IkegamiTeiji SuzukiTakeshi SatoYukihiro Nakayama

Masato InabaKenji NishideRyoichi HaraKinya Takimura

Gordon TanTakaaki HabuJason Peng

Kiminori SatoHideo GotoMasataka MitoAkira SaitaTomoharu Morimoto

Shigeo SekikawaDaiichiro TanakaShigeo UekiJunji FukuharaKoji Ueda

Akira SasagawaHideyuki HosoyaTakeaki KitajimaTakashi Takizawa

Tetsu ItoJoseph E. GallagherIkuo Kobayashi

|Directors

|Executive Officers Other Than Members of the Board

|Global Executive Officers

Managing Executive Officers

Global Executive Officers

Executive Officers

From left: Kenichiro Abe, Takashi Takizawa, Soichiro Sekiuchi, Hideyuki Hosoya, Ikuo Kobayashi, Akira Wada, Joseph E. Gallagher, Masahiko Ito, Yasuyuki Oda, Akira Sasagawa, Masaaki Shimojima, Yoshio Shirai, Takeaki Kitajima, Tetsu Ito

Top Management

Internal SDG Initiatives

The Fujikura Group provides internal education on SDGs by communicating information on the company’s Intranet and through

internal dialog.

To communicate information, we use our CSR blog for employees and strive to promote understanding of how daily activities

relate to the SDGs by placing SDG icons on related articles in the blog.

A number of internal dialogs have been held thus far. In the first, which was designed for middle and top management, we invited

an external expert and engaged in a dialog on the CSV thought process and group initiatives. The rest were aimed at new employees

and were in workshop form. Each group of participants selected SDGs and considered how each person could contribute to the

achievement of those goals.

Integration with Management StrategyWe formulated the Fujikura Group 2030 Vision in March 2017. This vision delineates how the group will carve out its own future amid

the unprecedented scale and pace of change in the world.

We will work to create new value through open innovation in the four market segments of Advanced Communication, Energy

& Industry, Life-Assistance, and Vehicle, based on our corporate slogan, “The Fujikura Group provides “tsunagu” (Japanese for

“connecting”) technologies that will resolve problems to make our future society sustainable and pleasant, and will continue to

increase our corporate value.”


Corporate Governance (iv) Audit & Supervisory Committee Activities The Audit & Supervisory Committee consists of five committee

members, four of which are outside directors. The members of

the Audit & Supervisory Committee elect a Full-time Audit &

Supervisory Committee Member from among themselves to ensure

the effectiveness of Audit & Supervisory Committee activities.

Mr. Yasuyuki Oda, the Full-time Audit & Supervisory Committee

Member, possesses many years of experience in the Finance and

Accounting Division of our company. Mr. Masaaki Shimojima, an

Audit & Supervisory Committee Member, possesses many years

of management experience in a key position in a major city bank.

Mr. Kenichiro Abe, an Audit & Supervisory Committee member,

is a certified public accountant. All of these committee members

possess considerable knowledge of finance and accounting. Outside

Audit & Supervisory Committee member Soichiro Sekiuchi is also an

attorney-at-law, has worked in corporate law for many years and has

considerable knowledge of corporate law.

Audits confirm that the execution of duties by the Board of

Directors complies with laws and regulations and the corporate

Articles of Incorporation and that company operations are being

executed appropriately. This is accomplished by establishing a

system of internal controls and monitoring and verifying the status

of operations and other aspects. Audits are conducted from the

perspectives of legality and appropriateness. This is accomplished

by conducting onsite audits of each in-house company and Group

company, examining important documents, and attending key

meetings.

The Audit & Supervisory Committee convenes once a month,

in principle, to report on and debate matters, based on the basic

audit policy and audit plans formulated at the beginning of the year.

Fujikura’s system also ensures that the Full-time Audit & Supervisory

Committee member can attend and voice his opinions at key

meetings where management decisions on business operations

are discussed. The system also ensures that Audit & Supervisory

Committee members have the opportunity to exchange opinions

with executive officers on a regular basis and also have opportunities

to request information themselves.

The Audit & Supervisory Committee gathers information

from the accounting auditors on and confirms the audit plans for

accounting audits at the beginning of the year, and receives reports

from the accounting auditor concerning the results of the interim

and fiscal year-end audits based on that information. To facilitate

an adequate exchange of opinions, Audit & Supervisory Committee

members also hold discussions several times a year with accounting

auditors to confer on details, the audit system, and other issues.

An Audit & Supervisory Committee Office has been

established to support the Audit & Supervisory Committee and

an administrator to manage the office has been appointed. The

Audit & Supervisory Committee Office reports directly to the

Audit & Supervisory Committee and maintains independence from

executive officers within the company. It provides support to the

Audit & Supervisory Committee as directly ordered by the Audit &

Supervisory Committee. The Audit & Supervisory Committee has

set up three-way conferences with the accounting auditor and the

internal Audit Division to ensure effective implementation of audits.

These conferences are formal meetings that are held quarterly

and were set up to replace the previous exchange of opinions as

needed. Participants in these conferences share information on the

operational status of the internal control system and the status of

individual audits, and exchange opinions on how to mitigate the risk

of fraud.

(v) Limited Liability AgreementAs specified in Article 427, Paragraph 1 of the Companies Act,

Fujikura concludes limited liability agreements with all outside

directors. These agreements limit the liability of outside directors

to the minimum liability specified in Article 425, Paragraph 1 of the

Companies Act for indemnification of damages specified in Article

Fujikura switched from the existing organizational structure of a

company with a board of corporate auditors to a company with

an audit and supervisory committee upon approval of the annual

General Meeting of Shareholders on June 29, 2017.

(i) Overview of Corporate Governance Structure

and the Reasons for Adopting this Structure Operation of the Company’s business is organized into three

in-house companies for each of its main businesses, the Power &

Telecommunication Systems Company, the Electronics Business

Company, and the Automotive Products Company. An executive

director is assigned to oversee each of the in-house companies. The

businesses that each of the companies is responsible for handle

a broad range of products and the customers and competitive

environment of each company differs greatly. We therefore believe

it necessary to build an agile structure that enables the executive

director in charge of each company to make decisions swiftly and

decisively. We also believe that a structure for making decisions

after sufficient deliberation that reflect the diverse knowledge

and independent perspectives of outside directors is necessary for

important matters that relate to the growth of the entire company

such as annual and mid-term business plans and large mergers and

acquisitions, and these are designated as matters requiring approval

by the Board of Directors.

This need for the abovementioned decision-making structure has

led us to determine the most appropriate corporate management

structure for our company to be that of a company with an audit and

supervisory committee because this system is agile and capable of

reflecting diverse knowledge and independent perspectives.

Specifically, this system will achieve the following:

(1) It will enable swift decision-making by narrowing the scope

of matters requiring approval of the Board of Directors, which

consists of nine directors who are not audit and supervisory

committee members and five directors who are audit and

supervisory committee members (four of which are outside

directors), to business plans and other important matters,

thereby reducing the number of matters requiring deliberation.

It will also enable the reflection of diverse, independent

perspectives by taking advantage of the broad range of

experience possessed by the four outside directors (consisting of

two outside directors with expertise in corporate management

in the financial and manufacturing sectors, one attorney, and one

C.P.A.).

(2) It will also enable agile management by the executive director in

charge of a specific business by delegating decisions concerning

that business to that executive director.

A Nominating Advisory Committee and a Remuneration Advisory

Committee have been established as advisory bodies to the Board

of Directors to ensure objectivity and transparency in nominating

directors and determining their remuneration.

(ii) System of Internal ControlsThe system of internal controls consists of an internal audit division,

a management division for the entire company, and management

divisions within each in-house company. These organizations

monitor the legality and appropriateness of the execution of

daily business. The retention and management of important

management information is handled by specifying and following

rules on management of documents and electronic information. The

Company has also established a Risk Management Committee. This

committee is responsible for identifying common company-wide

risks, establishing a compliance structure, and operating an internal

whistleblowing system, among other duties.

To ensure proper operation of our subsidiaries, we have

established a system in which each group company is overseen

by the in-house company or corporate division (hereafter, “in-

house company, etc.”) with which it is affiliated. Management of

these companies is within the scope of executive responsibilities

defined for the head of the in-house company, etc. The specific

responsibilities of each in-house company, etc. are: 1) to develop

a system of reporting for business results, personnel and

organizational matters, capital investment, product quality, and other

important matters; 2) to develop a certain level of accountability

and a system for provision of support and guidance by each in-

house company, etc. in regard to risk management; 3) to formulate a

corporate group business plan, and manage reconciliation of results

vs. the budget and human resources exchanges; and 4) to obligate

each group company to appoint a compliance administrator and

develop an official whistle-blowing system for each of the group

companies overseen.

(iii) Internal Audits The Audit Division was set up as a dedicated internal audit entity. It

conducts audits of each division and group companies. In FY2017,

the Audit Division conducted audits of ten divisions and 14 group

companies.

The Audit Division reports internal audit plans and the status of

audits performed to the Audit & Supervisory Committee at least once

a month, in principle. It also performs audit tasks at the direction of

the Audit and Supervisory Committee as necessary.

AppointAppoint

Assistance

Appoint

Delegation of important business execution

Cooperation

Supervision

Inquiry

Report

Inquiry

Report

Reporting/Cooperation

Internal Audit

Audit and Supervisory Committee O�ce

Nominating Advisory Committee (Election of candidates for Directors)

Audit Division

General Meeting of Shareholders

Board of Directors

Acc

ount

ing

Aud

itor

s Directors not serving as Audit and Supervisory Committee Members

Directors serving as Audit and Supervisory Committee Members Remuneration Advisory Committee

(Compensation to o�cers)

Group Companies

Supervision

Executive DirectorsIn-house Companies

Audit and Supervisory Committee


423, Paragraph 1 of the same act, when duties are executed in good

faith without gross negligence.

(vi) Outside Directors The Company has four outside directors: Mr. Soichiro Sekiuchi, Mr.

Masaaki Shimojima, Mr. Kenichiro Abe, and Mr. Yoshio Shirai. All are

directors who are Audit & Supervisory Committee members. Mr.

Sekiuchi is an attorney, Mr. Shimojima has experience in corporate

management (finance), Mr. Abe is a certified public accountant, and

Mr. Shirai has experience in corporate management (manufacturing

industry). The backgrounds of each of these directors enable them to

utilize their extensive expertise at Board of Directors meetings and

voice a broad range of independent opinions.

Each of the outside directors audits the performance of duties by

directors from the perspective of legality and appropriateness. They

accomplish this through onsite audits of each corporate division and

group company, examining important documents, and attending

Board of Directors meetings. They communicate with the Full-time

Audit & Supervisory Committee Member by reporting and discussing

their findings at monthly Audit & Supervisory Committee meetings.

Materials for Board of Directors meetings and Audit & Supervisory

Committee meetings are also distributed in advance.

Mr. Soichiro Sekiuchi, is an attorney-at-law with highly

specialized skills acquired over many years of working on corporate

legal matters. This has given him sufficient knowledge of corporate

management. Mr. Sekiuchi is an attorney of Tokyo Yurakucho Law

Office. Fujikura transacts no business with this firm and Mr. Sekiuchi

therefore meets the criteria for independence specified by Fujikura

and is qualified to serve as an outside director, which requires that he

maintain an independent status. Fujikura has reported Mr. Sekiuchi

as an independent officer to the Tokyo Stock Exchange.

Mr. Masaaki Shimojima has considerable knowledge in finance

and accounting, derived from many years of experience in a key

position at a major city bank. He is also well-versed in corporate

management. Mr. Shimojima was previously an executive officer at

Sumitomo Mitsui Banking Corporation, which is one of Fujikura’s

main banks, but retired in June 2003. Mr. Shimojima therefore meets

the Fujikura’s criteria for independence and is qualified to serve as

an outside director, which requires that he maintain an independent

status. Fujikura has reported Mr. Shimojima as an independent officer

to the Tokyo Stock Exchange.

Mr. Kenichiro Abe possesses highly specialized expertise as a

certified public accountant and ample knowledge of corporate

management gleaned from many years working as an accounting

auditor for numerous companies. We note that Mr. Abe was

previously a Representative Partner at PricewaterhouseCoopers

Aarata, which is our accounting firm, but left the company in

June 2012. He was not an audit partner for Fujikura while at

PricewaterhouseCoopers Aarata. Mr. Abe therefore meets Fujikura’s

criteria for independence and is qualified to serve as an outside

director, which requires that he maintain an independent status.

Fujikura has reported Mr. Abe as an independent officer to the Tokyo

Stock Exchange.

Mr. Yoshio Shirai has ample experience and knowledge as a

manager through his career history as a senior managing officer of

Toyota Motor Corporation, president & CEO of Hino Motors, Ltd., and

vice chairman of Toyota Tsusho Corporation. Mr. Shirai also possesses

experience as an outside director from service as an outside director

and Audit & Supervisory Committee member for Seiko Epson

Corporation from FY2016. Purchase and sale transactions between

Fujikura, Ltd. and Toyota Motor Corporation, Hino Motors, Ltd., and

Toyota Tsusho Corporation, where Mr. Shirai formerly served as an

executive officer, amount to less than 1% of consolidated net sales.

Mr. Shirai therefore meets Fujikura’s criteria for independence and

is qualified to serve as an outside director, which requires that he

maintain an independent status. Fujikura has reported Mr. Shirai as

an independent officer to the Tokyo Stock Exchange.

(Criteria for Independence of Outside Directors)

Fujikura has established the following criteria for determining the

independence of outside directors.

Individuals who currently constitute one of the following,

individuals who constituted one of the following during the past

three years, and individuals who have a spouse or a relative within

two degrees of kinship who constitutes or within the past three years

constituted one of the following do not qualify as independent.

• A material business partner of the Fujikura Group*1 or executive

officer of such*2

• An entity having Fujikura Group as a material business partner or

an executive officer of such

• A shareholder who holds 10% or more of total voting rights in

Fujikura or an executive officer of such

• An entity or the executive officer of such who received cash or

other substantial remuneration*3 from Fujikura or a subsidiary of

Fujikura, other than the remuneration received for serving as an

outside officer.

*1 Material business partner: Customers whose purchases from

Fujikura account for 1% or more of the consolidated net sales of the

Fujikura Group and vendors for which Fujikura’s purchases account

for 1% or more of that vendor’s consolidated net sales.

*2 Executive officer: An executive director or employee who

reports directly to the executive director

*3 Substantial remuneration: More than 10 million yen a year

Risks that could potentially have an adverse impact to the

business performance, share price, and financial health of the

Fujikura Group are discussed below. It should be noted that

the risks involved with the forward-looking statements herein

are those identified by the Fujikura Group in its securities

report filed with the Ministry of Finance (submitted on June

29, 2018).

(1) Demand Trends Given that our products are mainly used in infrastructures

or are components used in finished consumer goods, our

business performance is, almost without fail, impacted by

economic cycles. In addition, capital expenditure trends

in various markets and changes in consumer purchasing

attitudes are also factors that impact our performance.

(2) Fluctuations in Foreign Exchange Rates We carry out currency hedging strategies within the scope

of actual demand to minimize, to the best of our ability,

the negative impact that currency rate fluctuations have

on foreign-currency denominated sales. There is possibility

of an adverse impact to earnings due to exchange rate

fluctuations, as we cannot always fully avert exchange rate

risks. Moreover, Group operations include the manufacturing

and sales of products overseas, primarily in Asia. Accordingly,

the earnings, expenses, assets, and other items denominated

in local currencies, are translated into yen when we create our

consolidated financial statements. Depending on the foreign

exchange rates at the time, although these accounting items

retain their value in local currencies, there is a possibility value

will be eroded after conversion into yen.

(3) Fluctuations in Materials CostsCopper is the main material used in Group products. Copper

prices fluctuate mainly depending on shifts in international

supply-demand trends. A sharp change in copper price cannot

always be readily reflected in product prices. Consequently, there

is a possibility that a pronounced upshot in copper prices could

impact the Group’s business performance.

(4) Product DefectsThe Fujikura Group carries out the manufacturing of various

products in accordance with strict product quality control

standards. Nonetheless, there is no guarantee that we will

never experience a product defect or that quality complaints

will not arise further out. We have product liability insurance

but there is no assurance that this policy will cover all of our

liability costs in the end. Serious complaints and product

defects that lead to product liability cases trigger considerable

costs and have a grave impact on how society evaluates the

Group. The adverse impact connected with this includes the

possibility of a decline in sales.

(5) RegulationsThe regulations in the markets in which we operate apply to

our business activities. There are a number of regulations,

including government approval and authorization for

businesses and investments, regulations and taxes on business

transactions and trade, regulations controlling financial

transactions, and environmental restrictions. The Fujikura

Group carries out its business activities in compliance with

these regulations. Going forward, the business activities of our

Group could potentially be limited, should it become difficult

to comply with laws and ordinances after key revisions have

been made or if tougher restrictions are put in place. We

anticipate a rise in costs to remain in compliance with these

regulations. This will potentially have an adverse impact on

Group earnings.

(6) Lawsuits, Legal Action by Regulatory Authorities, and Other Legal Procedures

In performing our business activities, the Fujikura Group is

at risk of lawsuits, legal action by regulatory authorities, and

other legal issues. Potential risks include claims for damages,

monetary assessments imposed by regulatory authorities,

and restrictions placed on business operations as a result of

lawsuits, legal action by regulatory authorities, other legal

issues,. Lawsuits, legal action by regulatory authorities, and

other legal procedures pose a potential risk to the Group’s

businesses, earnings, and financial health.

(7) Political and Economic Trends We conduct our Power & Telecommunication Systems

Company, Electronics Business Company and Automotive

Products Company at home and abroad. Consequently,

political unrest and other conditions, mainly in the countries

in which we operate, could possibly have a negative impact on

our business performance.

Risks


(8) Interest Rate Fluctuations Our financing takes into account a balance between the

demand for capital, the climate in financial markets, and

procurement methods. A rise in interest rates translates into

a rise in interest payments. Accordingly, we view the rise in

interest rates as a potential risk to our business performance.

(9) Intellectual PropertiesWe protect our proprietary technologies with patents and

other intellectual property rights. At the same time, we are

very cautious not to infringe on the intellectual property

rights of a third party. However, during the diversification

of product structure and manufacturing technologies, and

the expansion of our business operations overseas, there is a

possibility that our products could inadvertently breach the

intellectual property rights of rival products. In this case, we

would inevitably have to halt sales and implement corrective

measures, such as changing our product design. Also, a third

party could infringe upon our intellectual property rights

but due to the differences in laws in other countries, there is

a possibility our rights would not be adequately protected.

In light of this, we view this as another potential risk to our

business activities and performance.

(10) Information LeakThe Group possesses a substantial amount of private individual

and sensitive information related to its business activities. We

are doing our utmost to maintain the confidentiality of this

information. However, we cannot rule out the possibility of this

information being leaked externally due to some unexpected

incident. This type of information leak would potentially

damage our image and result in compensation for damages,

which in turn would have a negative impact on Group earnings

and financial health.

(11) Disaster RiskThe Fujikura Group has a number of factories in Japan and

overseas. In the event our production facilities are destroyed

due to a natural disaster at one of our factory locations,

including wind and water damage due to a large-scale

earthquake or typhoon, it is likely that our capacity utilization

would decline due to suspended operations and expenses

would increase due to reflecting facilities repairs. Natural

disaster would potentially have a negative impact on the

Fujikura Group’s production system, its financial health, and

earnings.

42 Management Discussion & Analysis

44 Financial Review

44 Consolidated Balance Sheets

46 Consolidated Statements of Income

47 Consolidated Statements of Comprehensive Income

50 Consolidated Statements of Cash Flows

51 Notes to the Consolidated Financial Statements

72 Independent Auditor’s Report

Financial Section


Q1 Please explain the reasons for your forecast of growth in FPC sales amid slowing demand for smartphones.

The reasons for the forecast of growth are that the functions on end products are improving every year. The number of FPC points where the FPCs we supply are used are increasing and customers are ordering highly sophisticated products (high value-added products) to provide high quality as a marketing tool. We are also working to develop the business for other purposes such as FPC use in vehicles at a rapid pace.

Q2 Please explain the status of optical fiber.

Market demand is extremely strong and we are operating at full capacity at our plants in Japan and overseas.

We believe that we will see even greater growth in future demand for optical cable in the FTTx and DC markets in North America and Europe, in particular. We have already released strategic products in the optical cable business and they are highly popular. We also recognize the optical-related segment as a growth market and are actively investing capital in it.

We worked to increase capacity at our plant in Japan

last fiscal year and will increase capacity in China this fiscal year.

Q3 Please explain the status of the automotive business.

We have revised our order strategy for locations in Europe where profitability has deteriorated and are working on initiatives to implement a demand-based location strategy and improve the health of the business. Again, we intend to stick strictly with our policy of focusing on profitability rather than pursuing scale.

We are focusing on being diligent in maintaining our relationships with customers, improving productivity, and being able to create products at a low cost and provide consistent quality.

We aim to provide solutions from the entire Fujikura Group in the next-generation automotive products segment, which is undergoing a once-in-a-century transformation. These solutions will extend beyond business boundaries, rather than being solutions based in the Automotive Products Company alone.

Q4 Fujikura is considering major capital investments this fiscal year as well. Have there

Management Discussion & Analysis been any changes in your thinking concerning the capital investment and M&A in the 2020 Mid-term Business Plan?

There is basically no change and we will move forward according to the schedule set in the Mid-term Business Plan. I will outline the thought process again.

We have set the goal of 200 billion yen in capital investment over five years in the 2020 Mid-term Business Plan. While this is a considerable amount, we also forecast cumulative depreciation of around 200 billion yen during the same period.

Capital investment will peak in FY2018. We will work to recover our investment from FY2019 onward and will also work to improve financial soundness.

The investment in strategic growth areas will be mainly related to telecommunications in the Power & Telecommunications Systems Company and to development, automation, and other efforts to streamline operations in the Electronics Business Company.

We are interested in actively pursuing M&A, but have no specific plans at present. Please understand that investment in M&A would be in addition to this amount.

Q5 What is the status of new businesses?

We are strengthening marketing and product development in fiber laser, which was transferred to the Telecommunications Business in FY2016. While it appears that we are slightly behind schedule on the initial plan, we have succeeded in catching up to the highest power level in the industry.

We are currently receiving many orders and aim to make a contribution to profits as quickly as possible.

We are also injecting resources into the three key areas relating to next-generation automotive products, industrial equipment (composite materials processing equipment), and medical equipment in the current Mid-term Business Plan.

Q6 What is the open innovation talked about as a key measure in the Mid-term Business Plan?

We believe that our mission is not simply to sell products, but how to respond to customers and provide the value they seek.

Consequently, if our value chain lacks something needed to provide value, we want to procure that from elsewhere and supply the missing piece in the value chain. In other words, this means moving away from the concept of self-sufficiency.

We do not intend to stick exclusively to self-sufficiency in this day and age when technology is changing so rapidly.

M&A is one option for supplying missing pieces and

we intend to actively pursue M&A as well. Last year we presented our 2030 Vision, which is

based on open innovation and began planning for collaboration with venture firms. This year we also established an innovation hub in the Fukagawa district. This will provide a venue that will encourage open discussions by human resources who are innovative and who represent a diverse range of people.

Q7 What is your view on shareholder return?

Keeping balance in mind in the distribution of profits is the basis of shareholder return. We ultimately want to increase earnings per share while investing in growth and improving financial soundness, and intend to tie these two aspects together. We will target growth in dividends through growth in earnings per share.

The goal for the dividend payout ratio over the five years of the 2020 Mid-term Business Plan is 20% or more. We forecast net income of 23 billion yen for FY2018. The number of shares outstanding excluding treasury shares is currently 285 million shares. A dividend of 16 yen per share would put the dividend payout ratio at 19.8%, or roughly 20%. A dividend of 16 yen per share represents a 2-yen increase compared to FY2017.

Q8 What are your views on governance?

I recognize that ensuring transparency and fairness are basic to governance and are extremely important. The governance structure is not for appearances only. It is essential to fully implement the details. Last fiscal year, Fujikura made the transition to a company with an audit & supervisory committee structure. We increased the number of outside directors from one to four outside directors and also strengthened the supervisory and oversight function and increased the speed of decision-making by delegating authority to the executive directors in charge of each in-house company.

We also promoted a U.S. citizen to director for the first time this fiscal year as part of our strategy to achieve greater diversity.

Recently, there have been a series of scandals in Japanese companies (relating to quality assurance problems, and other matters). We have committed major mistakes in the past and are convinced that there would be no recovery from a second violation. We therefore intend to work even harder to strengthen compliance and believe that everyone in the Fujikura Group understands our group corporate philosophy which consists of our Mission, Vision, and Core Values (MVCV) is fundamental to achieving this.


Consolidated Balance SheetsFujikura Ltd. and its Consolidated Subsidiaries At March 31, 2017 and 2018

Thousands of Millions of yen U.S. dollars (Note 3)

Assets 2017 2018 2018Current assets:Cash and deposits ¥31,785 ¥34,285 $322,682Notes and accounts receivable, trade (Note 8) 148,969 151,237 1,423,407Finished goods (Note 12) 35,487 44,820 421,835Goods in process (Note 12) 24,684 29,244 275,238Raw materials and supplies (Note 12) 32,328 39,810 374,682Deferred tax assets (Note 18) 3,766 4,066 38,268Other 20,366 25,476 239,774Allowance for doubtful accounts (864) (697) (6,560) Total current assets 296,526 328,244 3,089,355

Non-current assets:Property, plant and equipment Buildings and structures, net 89,993 92,019 866,061 Machinery, equipment and vehicles, net 62,633 76,197 717,148 Land (Note 6) 15,652 15,635 147,153 Leased assets, net 2,479 219 2,061 Construction in progress 14,736 16,014 150,720 Other, net 9,788 11,202 105,431 Total property, plant and equipment 195,283 211,288 1,988,593Intangible assets Goodwill 7,123 4,236 39,868 Other 9,962 9,857 92,772 Total intangible assets 17,085 14,094 132,649

Investments and other assets Investment securities (Note 5) 41,295 38,435 361,741 Net defined benefit asset (Note 11) 3,231 2,419 22,767 Deferred tax assets (Note 18) 12,484 12,490 117,553 Other (Note 5) 25,023 33,264 313,073 Allowance for doubtful accounts (2,266) (2,145) (20,188) Allowance for investment loss (37) (37) (348) Total investments and other assets 79,731 84,427 794,607 Total non-current assets 292,100 309,810 2,915,859 Total assets ¥588,626 ¥638,055 $6,005,224

The accompanying notes to the consolidated financial statements are an integral part of these statements.

Thousands ofMillions of yen U.S. dollars (Note 3)

Liabilities 2017 2018 2018Current liabilities:Notes and accounts payable, trade (Note 8) ¥77,230 ¥77,166 $726,268Short-term borrowings (Note 6) 74,637 76,778 722,616Current portion of bonds (Note 6) 10,000 20,000 188,235Income taxes payable (Note 18) 3,671 2,612 24,584Provision for loss on guarantees - 1,593 14,993Other provision 24 35 329Other (Notes 6 and 7) 37,661 55,029 517,920 Total current liabilities 203,226 233,215 2,194,965

Non-current liabilities:Bonds (Note 6) 40,000 20,000 188,235Long-term borrowings (Note 6) 101,296 120,591 1,134,974Deferred tax liabilities (Note 18) 126 115 1,082Other provision 36 200 1,882Net defined benefit liability (Note 11) 8,184 8,479 79,802Other (Notes 6 and 7) 11,210 13,492 126,984

Total non-current liabilities 160,854 162,878 1,532,969Total liabilities 364,080 396,094 3,727,944

Contingent liabilities (Note 19)

Thousands ofMillions of yen U.S. dollars (Note 3)

Net assets 2017 2018 2018Shareholders' equity:Common stock 53,075 53,075 499,529Capital surplus 30,012 29,989 282,249Retained earnings 118,867 133,775 1,259,059Treasury stock (5,942) (6,388) (60,122) Total shareholders' equity (Note 21) 196,013 210,452 1,980,725

Accumulated other comprehensive income (loss):Valuation difference on available-for-sale securities 7,284 8,380 78,871Deferred gains (losses) on hedges 465 170 1,600Foreign currency translation adjustments 4,459 5,519 51,944Remeasurements of defined benefit plans (5,500) (5,213) (49,064)Total accumulated other comprehensive income 6,709 8,856 83,351

Non-controlling interests 21,823 22,651 213,186Total net assets 224,546 241,961 2,277,280Total liabilities and net assets ¥588,626 ¥638,055 $6,005,224



Consolidated Statements of IncomeFujikura Ltd. and its Consolidated Subsidiaries For the Years Ended March 31, 2017 and 2018


2017 2018 2018Net sales ¥653,795 ¥740,052 $6,965,195Cost of sales (Notes 10, 11 and 12) 525,150 606,544 5,708,649Gross profit 128,644 133,508 1,256,546Selling, general and administrative expenses (Notes 9, 10 and 11):Packing and transportation expenses 16,946 18,513 174,240Personnel expenses 39,814 42,438 399,416Other 37,652 38,212 359,642Total selling, general and administrative expenses 94,413 99,164 933,308 Operating income 34,230 34,343 323,228

Non-operating income:Interest income 267 317 2,984Dividend income 1,128 1,660 15,624Foreign exchange gains 746 1,307 12,301Share of profit of entities accounted for using equity method 1,046 1,504 14,155Other 866 1,454 13,685Total non-operating income 4,055 6,242 58,748Non-operating expenses:Interest expenses 2,623 3,019 28,414Loss on retirement of non-current assets 643 897 8,442Product repair costs due to customers' claims 349 676 6,362Other 2,114 1,870 17,600Total non-operating expenses 5,730 6,464 60,838 Ordinary income 32,555 34,122 321,148Extraordinary gains:Gain on sales of investment securities 465 1,073 10,099Other 180 15 141Total extraordinary gains 646 1,089 10,249Extraordinary losses:Business structure improvement expenses (Note 13) 3,187 2,450 23,059Provision for loss on guarantees - 1,593 14,993Loss on valuation of investments in capital of subsidiaries and associates - 1,496 14,080Impairment loss (Note 14) 27 775 7,294Other 1,655 219 2,061Total extraordinary losses 4,870 6,535 61,506 Income before income taxes 28,331 28,676 269,892

Income taxes (Note 18):Current 10,868 8,621 81,139Income taxes for prior periods 2,764 - - Deferred (2,329) (1,078) (10,146)Total income taxes 11,303 7,542 70,984Profit 17,027 21,134 198,908Profit attributable to non-controlling interests 4,127 2,774 26,108

Profit attributable to owners of parent ¥12,900 ¥18,359 $172,791


Consolidated Statements of Comprehensive IncomeFujikura Ltd. and its Consolidated Subsidiaries For the Years Ended March 31, 2017 and 2018


2017 2018 2018Profit ¥17,027 ¥21,134 $198,908Other comprehensive income Valuation difference on available-for-sale securities 1,600 1,048 9,864 Deferred gains (losses) on hedges 642 (554) (5,214) Foreign currency translation adjustments (3,495) 1,394 13,120 Remeasurements of defined benefit plans, net of taxes 3,127 296 2,786 Share of other comprehensive income of entities accounted for using equity method (359) 15 141 Other comprehensive income (Note 15) 1,516 2,200 20,706Comprehensive income 18,543 23,334 219,614(Breakdown) Comprehensive income attributable to owners of parent 14,645 20,512 193,054 Comprehensive income attributable to non-controlling interests ¥3,898 ¥2,822 $26,560



Consolidated Statements of Changes in Net AssetsFujikura Ltd. and its Consolidated Subsidiaries For the Years Ended March 31, 2017 and 2018

Millions of yen Shareholders' equity

Number ofshares issued

Commonstock

Capitalsurplus

Retainedearnings

Treasurystock

Totalshareholders'

equityBalance at March 31, 2016 360,863,421 ¥53,075 ¥57,333 ¥108,553 (¥25,353) ¥193,608Dividends paid - - (2,636) - (2,636)Profit attributable to owners of parent - - 12,900 - 12,900Purchase of treasury stock - - - (7,910) (7,910)Retirement of treasury stock (65,000,000) - (27,320) - 27,320 -Change of scope of consolidation - - 51 - 51Net changes of items other than shareholders' equity - - - - - Total changes of items during period - (27,320) 10,314 19,410 2,404Balance at March 31, 2017 295,863,421 ¥53,075 ¥30,012 ¥118,867 (¥5,942) ¥196,013Dividends paid - - (3,431) - (3,431)Profit attributable to owners of parent - - 18,359 - 18,359Purchase of treasury stock - - - (1,038) (1,038)Disposal of treasury stock - 443 - 592 1,036Change in ownership interest of parent due to transactionswith non-controlling interests - (465) - - (465)

Change of scope of equity method - - (19) - (19)Net changes of items other than shareholders' equity - - - - - Total changes of items during period - (22) 14,907 (445) 14,439Balance at March 31, 2018 295,863,421 ¥53,075 ¥29,989 ¥133,775 (¥6,388) ¥210,452

Millions of yen Accumulated other comprehensive income

Valuationdifference onavailable-for-

sale securities

Deferredgains

(losses) onhedges

Foreigncurrency

translationadjustments

Remeasurementsof defined

benefitplans

Totalaccumulated

othercomprehensive

income

Non-controllinginterests

Total netassets

Balance at March 31, 2016 ¥5,607 (¥8) ¥8,010 (¥8,644) ¥4,964 ¥19,407 ¥217,981Dividends paid - - - - - - (2,636)Profit attributable to owners of parent - - - - - - 12,900Purchase of treasury stock - - - - - - (7,910)Retirement of treasury stock - - - - - - - Change of scope of consolidation - - - - - - 51Net changes of items other than shareholders' equity 1,676 473 (3,550) 3,144 1,744 2,415 4,160Total changes of items during period 1,676 473 (3,550) 3,144 1,744 2,415 6,564Balance at March 31, 2017 ¥7,284 ¥465 ¥4,459 (¥5,500) ¥6,709 ¥21,823 ¥224,546Dividends paid - - - - - - (3,431)Profit attributable to owners of parent - - - - - - 18,359Purchase of treasury stock - - - - - - (1,038)Disposal of treasury stock - - - - - - 1,036Change in ownership interest of parent due to transactionswith non-controlling interests - - - - - - (465)

Change of scope of equity method - - - - - - (19)Net changes of items other than shareholders' equity 1,096 (295) 1,059 286 2,147 828 2,975Total changes of items during period 1,096 (295) 1,059 286 2,147 828 17,415Balance at March 31, 2018 ¥8,380 ¥170 ¥5,519 (¥5,213) ¥8,856 ¥22,651 ¥241,961


Thousands of U.S. dollars (Note 3) Shareholders' equity

Number ofshares issued

Commonstock

Capitalsurplus

Retainedearnings

Treasurystock

Totalshareholders'

equityBalance at March 31, 2017 295,863,421 $499,529 $282,466 $1,118,748 ($55,925) $1,844,828Dividends paid - - (32,292) - (32,292)Profit attributable to owners of parent - - 172,791 - 172,791Purchase of treasury stock - - - (9,769) (9,769)Disposal of treasury stock - 4,169 - 5,572 9,751Change in ownership interest of parent due to transactionswith non-controlling interests - (4,376) - - (4,376)

Change of scope of equity method - - (179) - (179)Net changes of items other than shareholders' equity - - - - - Total changes of items during period - (207) 140,301 (4,188) 135,896Balance at March 31, 2018 295,863,421 $499,529 $282,249 $1,259,059 ($60,122) $1,980,725

Thousands of U.S. dollars (Note 3) Accumulated other comprehensive income

Valuationdifference onavailable-for-

sale securities

Deferredgains

(losses) onhedges

Foreigncurrency

translationadjustments

Remeasurementsof defined

benefitplans

Totalaccumulated

othercomprehensive

income

Non-controllinginterests

Total netassets

Balance at March 31, 2017 $68,555 $4,376 $41,967 ($51,765) $63,144 $205,393 $2,113,374Dividends paid - - - - - - (32,292)Profit attributable to owners of parent - - - - - - 172,791Purchase of treasury stock - - - - - - (9,769)Disposal of treasury stock - - - - - - 9,751Change in ownership interest of parent due to transactionswith non-controlling interests - - - - - - (4,376)

Change of scope of equity method - - - - - - (179)Net changes of items other than shareholders' equity 10,315 (2,776) 9,967 2,692 20,207 7,793 28,000Total changes of items during period 10,315 (2,776) 9,967 2,692 20,207 7,793 163,906Balance at March 31, 2018 $78,871 $1,600 $51,944 ($49,064) $83,351 $213,186 $2,277,280



Consolidated Statements of Cash FlowsFujikura Ltd. and its Consolidated SubsidiariesFor the Years Ended March 31, 2017 and 2018


2017 2018 2018Cash flows from operating activities:Income before income taxes ¥28,331 ¥28,676 $269,892Depreciation and amortization 27,589 26,870 252,894Amortization of goodwill 3,545 2,618 24,640Increase (decrease) in provision 217 1,508 14,193Interest and dividend income (1,395) (1,977) (18,607)Interest expenses 2,623 3,019 28,414Share of (profit) loss of entities accounted for using equity method (1,046) (1,504) (14,155)Loss (gain) on sales of investment securities (465) (971) (9,139)Loss on valuation of investments in capital of subsidiaries and associates - 1,496 14,080Business structure improvement expenses 2,405 2,016 18,974Decrease (increase) in notes and accounts receivable, trade (7,463) (3,780) (35,576)Decrease (increase) in inventories (11,361) (22,089) (207,896)Increase (decrease) in notes and accounts payable, trade 6,363 2,089 19,661Increase (decrease) in other current liabilities 3,068 1,387 13,054Decrease (increase) in net defined benefit asset 1,340 1,272 11,972Increase (decrease) in net defined benefit liability (10) (3) (28)Other, net 1,928 (2,228) (20,969) Sub-total 55,670 38,399 361,402Interest and dividend income received 2,398 2,677 25,195Interest paid (2,681) (3,076) (28,951)Income taxes (paid) refund (11,764) (10,182) (95,831) Net cash provided by (used in) operating activities 43,623 27,818 261,816Cash flows from investing activities:Net decrease (increase) in time deposits (433) 361 3,398Payments for purchase of property, plant and equipment and other assets (46,495) (40,950) (385,412)Proceeds from sales of property, plant and equipment and other assets 2,205 852 8,019Proceeds from sales of investment securities 550 5,008 47,134Payments of loans receivable (11,774) (898) (8,452)Collection of loans receivable 3,626 2,181 20,527Purchase of long-term prepaid expenses (2,649) (1,291) (12,151)Payments for transfer of business (4,120) - - Proceeds from sales of shares of subsidiaries resulting in change in scope of consolidation (Note 17) - 665 6,259Payments for investments in capital of subsidiaries and affiliates (1,477) - - Other, net (65) (295) (2,776) Net cash provided by (used in) investing activities (60,633) (34,367) (323,454)Cash flows from financing activities:Net increase (decrease) in short-term loans payable (2,673) 11,854 111,567Net increase (decrease) in commercial papers (2,000) 2,000 18,824Proceeds from long-term loans payable 46,155 36,541 343,915Repayment of long-term loans payable (13,866) (26,709) (251,379)Redemption of bonds (20,000) (10,000) (94,118)Proceeds from issuance of bonds 19,901 - - Cash dividends paid (2,636) (3,431) (32,292)Purchase of treasury stock (7,909) (2) (19)Dividends paid to non-controlling interests (558) (175) (1,647)Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidationOther, net - 0 0 Net cash provided by (used in) financing activities 16,411 9,620 90,541Effect of exchange rate change on cash and cash equivalents (812) (199) (1,873)Net increase (decrease) in cash and cash equivalents (1,410) 2,871 27,021Cash and cash equivalents at beginning of period 32,091 30,680 288,753Cash and cash equivalents at end of period (Note 16) ¥30,680 ¥33,552 $315,784


- (456) (4,292)

Notes to the Consolidated Financial StatementsFujikura Ltd. and its Consolidated SubsidiariesFor the years ended March 31, 2017 and 2018

1. Basis of PresentationAccounting principles

The accompanying Consolidated Financial Statements of Fujikura Ltd. (the "Company") and its consolidated subsidiaries (together, the "Companies")are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects, application and disclosure requirements, from International Financial Reporting Standards, and are prepared by the Company as required by the Financial Instruments and Exchange Act of Japan.The Company adopted the "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated FinancialStatements" (Accounting Standards Board of Japan ("ASBJ") PITF No. 18, Mar 29, 2017) and "Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for Using the Equity Method" (PITF No. 24, March 29, 2017) and made necessary adjustments for the preparation of the Consolidated Financial Statements.In preparing the Consolidated Financial Statements, certain reclassification and presentation adjustments have been made to the Consolidated Financial Statements filed with the Director of the Kanto Local Finance Bureau in Japan in order to present these Consolidated Financial Statements in a form which is more familiar to readers of these Consolidated Financial Statements outside Japan.

2. Summary of Significant Accounting Policies(a) Consolidation and investments in affiliates

The Consolidated Financial Statements include the accounts of the Company and all significant subsidiaries (97 subsidiaries at March 31, 2017 and 98 subsidiaries at March 31, 2018). All significant intercompany transactions, accounts and unrealized intercompany profits are eliminated in consolidation.The difference between the cost and the underlying net equity of the investment in consolidated subsidiaries at the time of acquisition is deferred and amortized over a five-year period. Investments of 50% or less in companies over which the parent company does not have control but has theability to exercise significant influence, and investments in unconsolidated subsidiaries are generally accounted by the equity method(10 companies at March 31, 2017 and 9 companies at March 31, 2018) and included in Investment securities in the Consolidated Balance Sheets.When the accounts of subsidiaries and affiliates are not significant in relation to the Consolidated Financial Statements, they are carried at cost.The excess of the cost over the underlying net equity of investments in unconsolidated subsidiaries and affiliates accounted on an equity basisis deferred and amortized over a five-year period. Consolidated net income includes the Company's Equity in earnings of affiliates after eliminationof unrealized intercompany profits.

(b) Translation of foreign currency transactions and accountsForeign currency transactions are translated using the foreign exchange rates prevailing at the transaction dates. Receivables and payablesdenominated in foreign currencies are translated at the balance sheet date using current exchange rates. All asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese Yen at current exchange rates at the respective balance sheet dates and all income and expense accounts of those subsidiaries are translated at the average exchange rate for the respective fiscal year then ended.Foreign currency financial statement translation differences are reported as a separate component of Net Assets in the Consolidated Balance Sheets.

(c) Consolidated Statement of Cash FlowsFor the purpose of reporting cash flows, cash and cash equivalents include all highly liquid investments, with original maturities of three months orless, that are readily convertible to known amounts of cash and are so near maturity that they present only an insignificant risk of change in value because of changes in interest rates.

(d) Valuation of Investment securitiesSecurities held by the Companies have been classified into the following categories depending on the purpose for which they are held: Held-to-maturity debt securities: These securities are carried at amortized cost. Any premium or discount arising on acquisition is amortized and recognized as an adjustment to interest income/expense. Other securities: These securities are investment securities expected to be held in the long term. Securities for which fair values are readily determinable are carried at fair value with unrealized gains and losses, net of applicable income taxes, being recorded in net assets. Securities for which fair values are not readily determinable are recorded using the moving average cost.

(e) DerivativesDerivative financial instruments are measured at fair value, if determinable.

(f) InventoriesInventories are valued at the lower of cost or market, cost being determined mainly using the weighted average method.

(g) Property, plant and equipment, Intangible assetsProperty, plant and equipment are depreciated using the straight-line method over estimated useful lives.Intangible assets are amortized in line with the same method. The estimated useful lives are as follows:

Buildings: mainly 50 yearsMachinery and equipment: mainly 7 yearsIntangible assets: mainly 5 years

(h) Lease assetsFinance leases are depreciated using the straight-line method over their respective lease terms with no residual values.

(i) Allowance for doubtful accountsAllowance for doubtful accounts provides for estimated uncollectible accounts at amounts either specifically assessed or an amountcomputed based on historical loss experience.

(j) Allowance for investment lossAllowance for investment loss provides for anticipated losses due to the decline of values of investments in unconsolidated subsidiaries andaffiliates, considering financial conditions, etc.

(k) Provision for loss on guaranteesProvision for loss on guarantees provides for anticipated losses due to execution of guarantees, considering financial conditions in guaranteedcompanies.

(l) Accounting method for retirement benefitsI. Attribution method for the estimated amount of retirement benefits In calculating retirement benefits obligations, the method to attribute the estimated amount of retirement benefits to a period until the end of the consolidated fiscal year is based on the plan’s benefit formula.II. Accounting methods for actuarial differences and prior service cost Prior service cost is accounted for according to the straight-line method as they are incurred for a certain number of years (principally fifteen years) within the average remaining years of service of employees at the time of incurring. Actuarial differences are charged to expenses from the fiscal year subsequent to the fiscal year when incurred using a straight-line method mainly based on determined years (principally fifteen years) within the average remaining years of service of employees when incurred.


(m) Accounting for long-term construction-type contractsThe percentage-of-completion method of accounting is applied for the construction contracts which fulfill the conditions that the outcome of theconstruction activity is reasonably estimated during the course of the activity. Otherwise, the completed-contract method is applied. The cost-to-cost method is applied for estimating the percentage of completion.

(n) Hedge accounting The Companies apply hedge accounting for certain derivative financial instruments, which include foreign currency forward exchange contracts,interest rate swap agreements and commodity futures contracts. The companies utilize these hedging instruments to hedge risks of future changes in foreign exchange rates, interest rates and prices of raw materials within the normal course of the Companies' operations.Foreign currency exchange forward contracts: The Companies utilize foreign currency forward exchange contracts to limit exposure to changes in foreign currency exchange rates on accounts receivable and payable and cash flows generated from anticipated transactions denominated in foreign currencies. For foreign currency forward exchange contracts, which are designated as hedges, the Companies have adopted the accounting method where foreign currency denominated assets and liabilities are measured at the contract rate of the respective foreign currency forward exchange contract. With respect to such contracts for anticipated transactions, the contracts are marked-to-market and the resulting unrealized gains/losses are deferred and recorded in the income statement when the exchange gains/losses on the hedged items or transactions are recognized.Interest rate swap agreements: The Companies utilize interest rate swap agreements in order to limit the Companies' exposure with respect to adverse fluctuations in interest rates underlying the debt instruments. The related interest differentials paid or received under the interest rate swap agreements are recognized in interest expense over the term of the agreements.Commodity futures contracts: The Companies utilize commodity futures contracts to hedge the risk of future price fluctuations in some raw materials.

(o) GoodwillGoodwill is amortized using the straight-line method over 5 years.

(p) Income taxesIncome taxes are computed using the asset and liability approach. Under this approach, deferred tax assets and liabilities are recognizedfor the expected future tax consequences of temporary differences between the financial reporting basis and tax basis of assets and liabilities.Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that the tax benefits will not be realized.The Company files its tax return under the consolidated tax filing system for notional taxes.

(q) Consumption taxThe tax-excluded method is used with respect to consumption tax and local consumption taxes.

(r) Appropriations of retained earningsAppropriations of retained earnings reflected in the accompanying Consolidated Financial Statements are recorded upon approval bythe shareholders.

(s) Other basis for presentation of Consolidated Financial Statements Amounts less than ¥1 million have been omitted. As a result, the total shown in the Consolidated Financial Statements and notes thereto do not necessarily agree with the sum of the individual account balances.

(t) ReclassificationCertain accounts in the Consolidated Financial Statements for the year ended March 31, 2017 have been reclassified to conform tothe 2018 presentation.

(u) New Accounting Pronouncements and Changes in Accounting Policies(Changes to the depreciation method for property, plant and equipment and revisions to useful life)Previously, the Company and its domestic consolidated subsidiaries primarily used the declining-balance method of depreciation for its property, plant and equipment, while the overseas consolidated subsidiaries used the straight-line method. However, starting from this fiscal year, the Company and its domestic consolidated subsidiaries have adopted the straight-line depreciation method for the entire assets of property, plant and equipment. In consideration of the capital investment plans in the FY 2020 Mid-term Business Plan, the Fujikura Group reconsidered the depreciation methodfor its domestic property, plant and equipment. Consequently, the Company recognized that our production facilities were not exposed to be rapid obsolescent,either technologically or economically, in light of the actual usage. In addition, the Company anticipates stable operations over the remaining period of the useful lives of these facilities. Thus, the Company switched to the straight-line method, which allocates depreciation costs evenly over the periods.Owing to this change, the Fujikura Group now uses the straight-line method of depreciation.In conjunction with the change to the depreciation method, the Company and its domestic consolidated subsidiaries also reviewed the use of its property, plant and equipment. In accordance with this, the useful lives for a portion of its property, plant and equipment were revised to match the actual useful lives.As a result, in comparison with the previous method, operating income increased by ¥2,593 million (US$24,405 thousand),and ordinary income and income before income taxes increased by ¥2,598 million (US$24,452 thousand), respectively.Note that any impact to the segment information is discussed under the section Segment Information.

(v) Additional Information(Stock-based compensation plan for the Company’s directors)In accordance with a resolution passed at the 169th Annual General Shareholders' Meeting held on June 29, 2017, the Company introduced a stock-basedcompensation plan for Company’s Directors (limited to directors not serving as Audit and Supervisory Committee Members and excluding Outside Directors; hereinafter the same shall apply) and Executive Officers (hereinafter collectively referred to as "Directors") . The purpose of the plan is to clarify the correlationbetween the Company’s share price and Director compensation and to boost awareness of contribution to the improvement of corporate value by having the Directors share the benefits and risks of stock price fluctuation with shareholders—i.e. not only benefit when the share price rises but also shoulder the risk of a decline in share price.The accounting procedures for this system conform with the Practical Solution on Transactions of Delivering the Company’s Own Stock to Employees etc. through Trusts (PITF No. 30, March 26, 2015). I. Transaction summary The Company will set up a monetary trust. This trust will be used to acquire common shares of the Company. A director shall be granted points in each fiscal year according to the Stock Distribution Regulations set forth by the Board of Directors. The stock-based compensation will be delivered to the Directors via the trust. Note that in principle the Directors will receive delivery of said shares at the time of retirement.II. Shares remaining in the trust The shares of the Company that remain in the trust are recorded as treasury stock under net assets at book value (excluding associated costs). The book value of these treasury stock shares at the end of the fiscal year under review was ¥1,035 million (US$9,741 thousand) and there were 1,056 thousand shares.

3. United States Dollar AmountsAmounts in U.S. dollars are included solely for the convenience of readers outside Japan. The rate of exchange on March 31, 2018(¥106.25=US$1.00), has been used for translation purposes. The inclusion of such amounts is not intended to imply that Japanese Yenhas been or could be readily converted, realized or settled in U.S. dollars at this rate or any other rate.

4.Financial Instruments(a) Information on financial instruments Policies

The Companies enter into financing arrangements (primarily through bank loans or corporate bonds) based on the planned capital expenditures of its businesses. The Companies invest in low risk financial assets using available cash, finance their short-term working capital needs through commercial papers and bank loans. The Companies use derivative transactions within predetermined transaction volumes to limit the risk of significant fluctuations in foreign currency exchange rates, interest rates, and copper and aluminum prices.

The Companies do not enter into derivative transactions for speculative purposes.

Details of financial instruments and related risksTrade notes and accounts receivable are exposed to customer credit risk. Also, trade receivables denominated in foreign currencies, whichare derived from the Company's global business expansion, are exposed to fluctuations in foreign currency exchange rates, however, the exposure is mitigated by entering into foreign exchange forward contracts.

Investment securities consist mainly of equity securities, which are exposed to market price fluctuation risks.

Trade notes and accounts payable have payment terms within one year. Also, within these accounts there are foreign currency denominated balances generated from the import of raw materials and therefore the balances are exposed to fluctuations in foreign currency exchange rates. However, such balances are typically less than accounts receivable balances denominated in the same currencies. Borrowings and corporate bonds are used primarily for capital expenditures and have maturity dates within mainly five years subsequent to the balance sheet date. Certain borrowing contracts are based on variable, or floating, interest rates, which are exposed to fluctuation risk and are hedged via interest rate swap agreements.

Derivative transactions are comprised primarily of foreign exchange forward contracts hedging foreign currency exchange rate fluctuationrisk in trade receivables/payables denominated in foreign currencies, of interest rate swap agreements hedging interest rate fluctuation riskin bank loans, and commodity forward contracts hedging the risk of copper and aluminum price fluctuation.

Risk management over financial instruments (1) Credit risk management (risk of customers' default risk, etc.)

The Company periodically monitors major customers' financial conditions and performs customer specific aging analyses. In addition, the Company monitors doubtful accounts due to the current economic difficulties in accordance with the credit management policy. The consolidated subsidiaries and affiliates are also required to conform with the credit management policy of the Company.

In order to mitigate credit risks to the greatest extent possible with regards to derivative transactions, the Companies' counterparties arefinancial institutions that maintain high credit ratings.

The financial assets exposed to credit risks recorded in the Consolidated Balance Sheets represent the maximum exposure to credit riskas of March 31, 2017 and March 31, 2018.

(2) Market risk management (risk of fluctuations in foreign currency rates, interest rates, etc.)The Company and certain consolidated subsidiaries generally use foreign exchange forward contracts to limit foreign currency exchange rate fluctuation risk in trade receivables/payables denominated in foreign currencies. Depending on the foreign currency market condition, the Companies use foreign exchange forward contracts for trade receivables denominated in foreign currencies generated from highly probable forecasted export transactions. Also, the Company and certain consolidated subsidiaries use interest rate swap agreements to limit interest rate fluctuation risk associated with bank loans.

In relation to investment securities, the Companies continuously monitor the related market values and financial condition of the issuers while also taking into consideration their business relationships with the issuers.

In executing and managing the daily operations of derivative transactions, the Companies regularly monitor transaction balances/volumesand profit/loss status. Such information is periodically reported to the responsible management team and is audited by certain administration divisions. Prior approval by an Executive Officer of the Company is generally required to enter into significant transactions, transaction modifications or applications for the use of new financial instruments.

(3) Liquidity risk management for financing activities (risk of inability to repay on the due date)The Company manages liquidity risk by preparing cash flow forecasts, led by the finance division, based on relevant information reported from the respective divisions.

Supplementary information on the fair value of financial instrumentsThe fair value of financial instruments is based on market values as well as reasonably determined values in situations where the market fair value is unavailable. The determination of such values is based on certain assumptions, which may result in different outcomes if other assumptions are applied.


(b) Fair values of financial instrumentsThe book value of financial instruments in the Consolidated Financial Statements, their fair value and net difference at March 31, 2017 and 2018, respectively, are shown below:

Millions of yen

2017(1) Cash and deposits ¥31,785 ¥31,785 ¥ -

(2) Notes and accounts receivable, trade 148,969 Less: Allowance for doubtful accounts (847)Total 148,122 148,122 -

(3) Investment securities 33,396 34,534 1,138(4) Notes and accounts payable, trade 77,230 77,230 - (5) Short-term borrowings (*1) 49,529 49,529 - (6) Income taxes payable 3,671 3,671 - (7) Bonds (*2) 50,000 50,272 272(8) Long-term borrowings (*1) 126,404 126,681 276

(9) Derivative Instruments (*3) Non-hedge derivative instruments (163) (163) - Designated hedge instruments ¥823 ¥823 ¥ -

(*1) ¥25,108 million of the Long-term borrowings which mature within 1 year and are recorded in "Short-term borrowings" in the consolidated balance sheets are included in "Long-term borrowings" above.(*2) ¥10,000 million of the bonds which mature within 1 year and are recorded in "Current portion of bonds" in the consolidated balance sheets are included in "Bonds" above.(*3) Net receivables and (liabilities) related to the derivative transactions are presented net.

Millions of yen Thousands of U.S. dollars

2018(1) Cash and deposits ¥34,285 ¥34,285 ¥ - $322,682 $322,682 $ -

(2) Notes and accounts receivable, trade 151,237 1,423,407 Less: Allowance for doubtful accounts (666) (6,268)Total 150,570 150,570 - 1,417,129 1,417,129 -

(3) Investment securities 30,627 31,541 914 288,254 296,856 8,602(4) Notes and accounts payable, trade 77,166 77,166 - 726,268 726,268 - (5) Short-term borrowings (*1) 63,374 63,374 - 596,461 596,461 - (6) Income taxes payable 2,612 2,612 - 24,584 24,584 - (7) Bonds (*2) 40,000 39,985 (15) 376,471 376,329 (141)(8) Long-term borrowings (*1) 133,995 133,475 (519) 1,261,129 1,256,235 (4,885)

(9) Derivative Instruments (*3) Non-hedge derivative instruments (1,668) (1,668) - (15,699) (15,699) - Designated hedge instruments ¥209 ¥209 ¥ - $1,967 $1,967 $ -

(*1) ¥13,404 million (US$126,155 thousand) of the Long-term borrowings which mature within 1 year and are recorded in "Short-term borrowings" in the consolidated balance sheets are included in "Long-term borrowings" above.(*2) ¥20,000 million (US$188,235 thousand) of the bonds which mature within 1 year and are recorded in "Current portion of bonds" in the consolidated balance sheets are included in "Bonds" above.(*3) Net receivables and (liabilities) related to the derivative transactions are presented net.

Book value Fairvalue Difference



Note 1: Method used to determine fair value of financial instruments, securities and derivative instruments:

(1) Cash and depositsThe cost of cash and deposits approximate fair value due to their short term maturities.

(2) Notes and accounts receivable, tradeThe cost of notes and accounts receivable, trade approximate fair value due to their short term maturities. For certain accounts receivables, the Companies enter into foreign exchange forward contracts for which a simplified method of determining fair value is applied and allowable under JGAAP. The fair values of such receivables are determined on an aggregate basis with the related foreign exchange forward contract.

(3) Investment securitiesThe fair value of listed equity securities are determined using quoted market prices for those securities. The fair value of debt securities are determined using quoted market prices or the prices provided by the counterparty financial institutions.

(4) Notes and accounts payable, trade, (5) Short-term borrowings and (6) Income taxes payableThe costs of these items approximate fair values due to their short term maturities.

(7) BondsThe fair value of bonds issued by the Company is determined using quoted market prices.

(8) Long-term borrowingsThe fair value of these items is determined based on the present value of the principal and interest discounted at the current interest rate charged for a similar borrowing. For long-term borrowings with a floating interest rate, the Companies enter into interest swaps for which a simplified method is applied and allowable under JGAAP. Such long-term borrowings are combined with the related interest swaps and their fair values are determined based on the present value of the principal and interest reflecting the swap discounted at the current interest rate charged for a similar borrowing.

(9) Derivative instrumentsThe Companies use a forward exchange rate for foreign exchange forward contracts. Commodity futures contracts fair values are calculated based on LME(London Metal Exchange) and SHFE (Shanghai Futures Exchange) official prices and current exchange rates. Foreign exchange forward contracts are accounted for combined with the accounts receivables designated as hedged items, and their fair values are included in the related accounts receivable. Interest swaps for which a simplified method allowed under JGAAP is applied are combined with the long-term borrowings designated as hedgeditems, and their fair values are included in long-term borrowings.

Note 2: Financial instruments for which estimation of fair value is extremely difficult

2017 Millions of yenDescription Amount recorded in consolidated

balance sheets Non-public companies ¥7,899

2018 Millions of yen Thousands of U.S. dollarsDescription Amount recorded in consolidated Amount recorded in consolidated

balance sheets balance sheets Non-public companies ¥7,808 $73,487

These items are not included in "(3) Investment securities" because it is extremely difficult to determine their fair value as there is no quoted market price for these companies available and it is difficult to estimate the future cash flows of these companies.


Note 3: The aggregate annual maturities of cash and deposits, and receivables at March 31, 2017 and 2018 are as follows:

Millions of yen

At March 31, 2017 Due within1year

Due after 1year through

5 years

Due after 5years through

10 years

Due after 10years

Cash and deposits ¥31,785 ¥ - ¥ - ¥ - Notes and accounts receivable, trade 148,969 0 - - Total ¥180,755 ¥0 ¥ - ¥ -

Millions of yen



5 years


10 years

Due after 10years

Cash and deposits ¥34,285 ¥ - ¥ - ¥ - Notes and accounts receivable, trade 151,237 - - - Total ¥185,523 ¥ - ¥ - ¥ -




5 years


10 years

Due after 10years

Cash and deposits $322,682 $ - $ - $ - Notes and accounts receivable, trade 1,423,407 - - - Total $1,746,099 $ - $ - $ -

Note 4: The annual maturities of bonds and long-term borrowings at March 31, 2017 and 2018 are as follows:

At March 31, 2017

Bonds Millions of yen

Year ending March 31, 2018 ¥10,0002019 20,0002020 - 2021 - 2022 10,0002023 and thereafter 10,000

Long-term borrowings Millions of yen

Year ending March 31, 2018 ¥25,1082019 9,7212020 38,6452021 42,9272022 10,0002023 and thereafter 1

At March 31, 2018

Bonds Thousands of Millions of yen U.S. dollars

Year ending March 31, 2019 ¥20,000 $188,2352020 - -2021 - -2022 10,000 94,1182023 - -2024 and thereafter 10,000 94,118

Long-term borrowings Thousands of Millions of yen U.S. dollars

Year ending March 31, 2019 ¥13,404 $126,1552020 42,807 402,8892021 47,237 444,5842022 13,424 126,3442023 17,120 161,1292024 and thereafter 1 9

5. Investment Securities

The aggregate cost, gross unrealized gains, gross unrealized losses and fair value of held-to-maturity investment securities at March 31, 2017 and 2018 consisting primarily of equity securities are as follows:

Thousands of Millions of yen U.S. dollars

2017 2018 2018Cost ¥15,962 ¥11,495 $108,188Gross unrealized gains 9,472 10,714 100,838Gross unrealized losses (203) (87) (819)Fair value ¥25,231 ¥22,122 $208,207

Available-for-sale investment securities sold during the year ended March 31, 2017 and 2018 are as follows:


2017 2018 2018Investment securities Sales amount ¥350 ¥5,541 $52,151 Gain on sales of investment securities 465 1,073 10,099　　Loss on sales of securities - 101 951

Investments in unconsolidated subsidiaries and affiliates at March 31, 2017 and 2018 are as follows:Thousands of

Millions of yen U.S. dollars2017 2018 2018

Investments securities ¥14,228 ¥14,535 $136,800Investments and other assets, other 11,830 11,069 104,179

¥26,058 ¥25,604 $240,979

6. Short-term Borrowings, Long-term borrowingsShort-term borrowings at March 31, 2017 and 2018 are as follows:


2017 2018 2018Loans, principally from banks, with weighted-average interest rates of1.5% and 1.6% per year at March 31, 2017 and 2018, respectively. ¥49,529 ¥63,374 $596,461Commercial papers, with weighted-average interest rates of (0.0)% per year at March 31, 2018. - 2,000 18,824

¥49,529 ¥65,374 $615,285


Long-term borrowings at March 31, 2017 and 2018 is as follows:Thousands of


Unsecured loans from banks and other financial institutions with maturity dates from 2018 to 2028 with weighted-average interest rates of 1.3% and 1.4% at March 31, 2017 and 2018, respectively.

¥126,404 ¥133,995 $1,261,129

Lease obligations 330 248 2,334

Unsecured straight bonds issued from September 7, 2011 to September 6, 2016 with interest rates ranging from 0.1% to 0.8%, maturity dates September 7, 2018 to September 6, 2023 50,000 40,000 376,471

176,735 174,244 1,639,944

Less: current portion due within one year Long term borrowings (25,108) (13,404) (126,155) Bonds (10,000) (20,000) (188,235) Lease obligations (136) (113) (1,064) Total (35,244) (33,518) (315,464)

¥141,490 ¥140,726 $1,324,480

The Companies' assets pledged as collateral for other interest-bearing debts at March 31, 2017 and 2018 are as follows:Thousands of


Carrying values of property, plant and equipment:Land ¥992 ¥992 $9,336

The Companies' debt pledged as collateral for other interest-bearing debts at March 31, 2017 and 2018 are as follows:Thousands of


Carrying values of liabilities:Current liabilities Other ¥606 ¥606 $5,704Non-current liabilities Other 3,032 2,446 23,021

The annual maturities of long-term borrowings are as follows:Thousands of

Long term borrowings Millions of yen U.S. dollarsYear ending March 31,2020 ¥42,807 $402,8892021 47,237 444,5842022 13,424 126,3442023 17,120 161,129

Thousands of Lease obligations Millions of yen U.S. dollarsYear ending March 31,2020 ¥58 $5462021 41 3862022 25 2352023 8 75

Thousands of Bonds Millions of yen U.S. dollarsYear ending March 31,2020 ¥ - $ -2021 - - 2022 10,000 94,1182023 - -

7. Other Long-term LiabilitiesOther than the loans and debts included in note 6, interest-bearing debts, which consisted of guarantee money received in the amounts of¥2,124 million and ¥1,538 million (US$14,475 thousand), were recorded as a part of other long-term liabilities in the Consolidated Balance Sheetsas of March 31, 2017 and 2018, respectively.

8. Notes Maturing at the year endThe Companies had Notes receivable and payable which had a maturity date at March 31, 2018 but were not settled until April 2, 2018 due to a bank holiday.For accounting purposes, these notes have been treated as settled.The amount of Notes receivables was ¥1,420 million (US$13,365 thousand) and Notes payable was ¥694 million (US$6,532 thousand) at March 31, 2018.

9. Selling, general and administrative expensesSelling, general and administrative expenses for the years ended March 31, 2017 and 2018 are as follows:


2017 2018 2018Depreciation and amortization ¥2,624 ¥2,775 $26,118Retirement benefit cost 2,151 1,782 16,772

10. Research and Development CostsResearch and development costs included in Selling, general and administrative expenses and Cost of sales, in aggregate, for the years endedMarch 31, 2017 and 2018, amounted to ¥15,614 million and ¥16,291 million (US$153,327 thousand), respectively.

11. Severance Indemnities and Pension Plans(a) Outline of retirement and severance benefits plans adopted by the Companies The Company and its consolidated subsidiaries sponsor various defined benefit plans such as corporate pension plans and lump sum retirement plans for their employees. Certain consolidated subsidiaries also sponsor defined contribution plans.

(b) Defined benefit plan The following tables present summaries of the benefit obligations for defined pension plans, plan assets and the associated funded status recorded in the Consolidated Balance Sheets. (1) Benefit obligations at the beginning of the period and the end of the period (excluding those plans that adopt the simplified method as discussed in (3) below)


2017 2018 2018Balance at the beginning of the period ¥58,195 ¥53,897 $507,266 Service cost 2,537 2,429 22,861 Interest cost 183 265 2,494 Actuarial (gains) or losses (1,359) 685 6,447 Retirement benefits paid (5,164) (3,614) (34,014) Other (493) (78) (734)Balance at the end of the period ¥53,897 ¥53,584 $504,320

(2) Plan assets at the beginning of the period and the end of the period (excluding those plans that adopt the simplified method as discussed in (3) below)Thousands of

U.S. dollars2017 2018 2018

Balance at the beginning of the period ¥52,651 ¥51,105 $480,988 Expected return on plan assets 917 733 6,899 Actuarial (gains) or losses 71 (365) (3,435) Employer's contributions 1,470 1,412 13,289 Retirement benefits paid (4,003) (3,045) (28,659)Balance at the end of the period ¥51,105 ¥49,841 $469,092

(3) Defined benefit liability at the beginning of the period and the end of the period for consolidated subsidiaries adopting the simplified method


2017 2018 2018Balance at the beginning of the period ¥2,126 ¥2,160 $20,329 Retirement benefit cost 300 305 2,871 Retirement benefits paid (117) (95) (894)　 Annual contribution (149) (215) (2,024) Other 162 1,525Balance at the end of the period ¥2,160 ¥2,317 $21,807

(4) Reconciliation between the liabilities (assets) recorded in the Consolidated Balance Sheets and the balances of defined benefit obligations and plan assetsThousands of

U.S. dollars2017 2018 2018

Retirement benefit obligations of the savings plans ¥53,451 ¥52,150 $490,824Plan assets (39,396) (37,213) (350,240)Retirement benefits trusts (13,436) (13,628) (128,264)

618 1,307 12,301Retirement benefit obligations of the non-savings plans 4,333 4,752 44,725Net liabilities and assets recorded on the Consolidated Balance Sheets 4,952 6,060 57,035Net defined benefit liability 8,184 8,479 79,802Net defined benefit asset (3,231) (2,419) (22,767)Net liabilities (assets) recorded on the Consolidated Balance Sheets ¥4,952 ¥6,060 $57,035

(5) Components of net periodic retirement benefits costsThousands of

U.S. dollars2017 2018 2018

Service cost ¥2,537 ¥2,429 $22,861Interest cost 183 265 2,494Expected return on plan assets (917) (733) (6,899)Recognized actuarial (gains) or losses 2,540 1,720 16,188Amortization of prior service cost (263) (263) (2,475)Net retirement benefit costs of the plans adopting the simplified method 300 305 2,871Retirement benefit costs related to the defined benefit plans ¥4,380 ¥3,723 $35,040Note. Extra retirement payments for the years ended March 31, 2017 and 2018 in the amount of ¥1,497 million and ¥1,976 million (US$18,598 thousand) respectively, are accounted for as "Business structure improvement expenses" of Extraordinary loss.

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Millions of yen


(6) Remeasurements of defined benefit plans before deduction of deferred taxThousands of

U.S. dollars2017 2018 2018

Unrecognized prior service cost ¥243 ¥263 $2,475Unrecognized actuarial (gains) or losses (3,980) (649) (6,108)Total (¥3,737) (¥386) ($3,633)

(7) Accumulated other comprehensive income before deduction of deferred tax on defined retirement benefit plansThousands of

U.S. dollars2017 2018 2018

Unrecognized prior service cost (¥1,059) (¥796) ($7,492)Unrecognized actuarial (gains) or losses 8,658 8,008 75,369Total ¥7,598 ¥7,212 $67,878

(8) Plan assets consisted of the following : 2017 2018Bonds 29 25 %Equity securities 19 22Cash and deposits 27 19General accounts 7 7Others 17 27Total 100 100 %Note. Employee retirement benefits trusts contributed to the company pension plan as of March 31, 2017 and 2018 represent approximately 25% and 27% of "Plan assets" respectively .

(9) Method to establish a long-term expected return on plan assets To determine the long-term expected return on plan assets, the present and expected allocation of plan assets and the present and expected future returns from a variety of plan assets have been taken into account.

(10) The actuarial assumptions used2017 2018

Discount rates Mainly 0.4% Mainly 0.3% Expected long-term expected return on plan assets Mainly 2.5% Mainly 1.9% Lump sum election rate 　Mainly 63.7% 　Mainly 69.0% Re-evaluation rate Mainly 1.0% Mainly 0.5%

(c) Defined contribution plan Total annual contributions to the defined contribution plans for the years ended March 31, 2017 and 2018 are ¥395 million and ¥445 million (US$4,188 thousand), respectively.

12. InventoriesInventories are valued at the lower of cost or market and the associated losses on inventory devaluation have been included in "Cost of sales" for the years ended March 31, 2017 and 2018 in the amounts of ¥2,007 million and ¥2,918 million (US$27,464 thousand), respectively.

13.Business Structure Improvement ExpensesFor the Year Ended March 31, 2017 Millions of yenExtraordinary loss due to reorganization and liquidation of Viscas Corporation ("Viscas") ¥1,642Special retirement pay and other outlays paid to early retirees at overseas subsidiaries 1,544Total ¥3,187

Extraordinary loss due to reorganization and liquidation of Viscas

Thousands of For the Year Ended March 31, 2018 Millions of yen U.S. dollarsSpecial retirement pay in tandem with liquidation of a subsidiary’s site ¥1,976 $18,598Retirement of assets in tandem with the liquidation of a subsidiary’s site 474 4,461Total ¥2,450 $23,059

14.Impairment lossGrouping method:The Companies grouped long-lived assets into asset groups by merchandise category.Idle assets are grouped on an individual asset basis.

For the year ended March 31, 2018, the Company has recorded impairment losses against the following asset groups:

Location: Fujikura Ltd. (Moka, Tochigi) Use: Connector manufacturing plant, etc Type: Land, etc Amount of impairment losses: ¥345 million (US$3,247 thousand)

The sale of the above real estate to a third party has been finalized. Therefore the difference between the selling price and the book value wasposted as impairment loss.

On April 25, 2016, the Company and Furukawa Electric Co., Ltd. ("Furukawa") signed an agreement on the reorganization and liquidation of theirjoint venture Viscas. On October 1, 2016, in accordance with the agreement, the Distribution and Overhead Transmission Businesses of Viscaswere transferred to the Company, and the Underground Transmission and Submarine Cable Businesses of Viscas were transferred to Furukawa.The extraordinary losses of 1,642 million yen recognized in conjunction with the reorganization and liquidation of Viscas consist of a loss on thetransfer of businesses, cost for the relocation and removal of facilities, a loss on valuation of the investment and loss on the transfer ofownership, due to the liquidation and sale of Viscas.

Millions of yen

Millions of yen

15. Consolidated Statements of Comprehensive IncomeFor the Years Ended March 31, 2017 and 2018Amount of reclassification and tax effect related to other comprehensive income are summarized as follows:


Valuation difference on available-for-sale securities 2017 2018 2018Amount arising during the year ¥2,384 ¥2,288 $21,534

Reclassification adjustment (182) (909) (8,555) Before tax effect adjustment 2,201 1,379 12,979 Tax effect (601) (330) (3,106) Valuation difference on available-for-sale securities 1,600 1,048 9,864

Deferred gains or losses on hedges mount arising during the year 681 173 1,628　 Remeasurements of acquisition cost for asset - (704) (6,626) Before tax effect adjustment 681 (530) (4,988) Tax effect (39) (23) (216)　　Deferred gains or losses on hedges 642 (554) (5,214)

Foreign currency translation adjustments Amount arising during the year (3,472) 1,394 13,120 Reclassification adjustment (22) - - Foreign currency translation adjustments (3,495) 1,394 13,120

Remeasurements of defined benefit plans, net of taxes Amount arising during the year 1,559 (1,072) (10,089) Reclassification adjustment 2,277 1,458 13,722 Before tax effect adjustment 3,836 386 3,633 Tax effect (709) (90) (847) Remeasurements of defined benefit plans, net of taxes 3,127 296 2,786

Share of other comprehensive income of associates accounted for using equity method Amount arising during the year (430) 0 0 Reclassification adjustment 71 15 141 Share of other comprehensive income of associates accounted for using equity method (359) 15 141 Other comprehensive income ¥1,516 ¥2,200 $20,706

16. Supplementary Cash Flow Information A reconciliation of cash and cash equivalents in the Consolidated Statement of Cash Flows and account balances in the Consolidated Balance Sheets at March 31, 2017 and 2018 are as follows:


2017 2018 2018Cash and deposits ¥31,785 ¥34,285 $322,682Deposits with original maturities of over three months (1,105) (733) (6,899)Cash and cash equivalents ¥30,680 ¥33,552 $315,784

17. Breakdown of Assets and Liabilities of Companies which were no longer Consolidated Subsidiaries due to the Sale of Shares in the Company during the Fiscal Year Fujiden Co., Ltd. is no longer a consolidated subsidiary due to the sale of shareholdings in the company. The breakdown of assets and liabilities at the time of sale and the selling price and revenue from the sale are as follows:


Current assets ¥11,420 $107,482Non-current assets 973 9,158Current liabilities (10,264) (96,602)Non-current liabilities (283) (2,664)Non-controlling interests (747) (7,031)Valuation difference for other securities (54) (508)Loss on sale of shares (67) (631)Stock sale value 976 9,186Accounts receivable (182) (1,713)Cash and cash equivalents (128) (1,205)　Difference：Revenue on sale value ¥665 $6,259


18. Income TaxesThe Company and its domestic subsidiaries are subject to a number of different income taxes which, in aggregate, indicate a normalstatutory tax rate in Japan of approximately 30.4% for the years ended March 31, 2017 and 2018.A reconciliation between the normal statutory income tax rate and the effective income tax rate in the accompanying ConsolidatedStatements of Income for the years ended March 31, 2017 and 2018 are as follows:

2017 2018Normal statutory tax rate 30.4 % 30.4 %Effect on tax rate resulting from permanent differences 0.6 (0.5)Equity in losses of affiliates (1.1) (1.6)Tax exemption in foreign tax jurisdiction (4.6) (3.0)Valuation allowance 2.5 3.7Effect of lower tax rates at overseas subsidiaries (4.3) (3.4)Amortization of Goodwill 4.2 2.9Income taxes for prior periods 6.2 -Foreign taxes included in deductible expenses 3.9 0.4Other 2.0 (2.5)Effective income tax rate 39.9 % 26.3 %

The significant components of deferred tax assets and liabilities at March 31, 2017 and 2018 are as follows:Thousands of


Deferred tax assets:Net operating losses carried forward ¥18,309 ¥16,186 $152,339Net defined benefit liability 4,386 4,482 42,184Allowance for doubtful accounts 2,400 2,751 25,892Depreciation 3,412 2,688 25,299Loss on valuation of investment securities 2,249 2,202 20,725Bonus accrual 2,554 2,015 18,965Impairment losses 1,100 1,170 11,012Foreign tax credit carried forward 276 976 9,186Inventory devaluations 1,190 853 $8,028Elimination of intercompany profits on fixed assets 810 764 7,191Provision for loss on guarantees 0 480 4,518Enterprise taxes 172 347 3,266Elimination of intercompany profits on inventories 308 279 2,626Other 4,831 4,563 42,946Gross deferred tax assets 42,003 39,764 374,249Less: valuation allowance (21,519) (19,137) (180,113)Total deferred tax assets 20,484 20,626 194,127

Deferred tax liabilities:Unrealized gains on investment securities 2,030 2,361 22,221Retained earnings of equity-method affiliated company 931 969 9,120Special tax-purpose reserve for deferred gain on sale of property 722 637 5,995Other 681 261 2,456Total deferred tax liabilities 4,367 4,231 39,821Net deferred tax assets ¥16,116 ¥16,394 $154,296

Net deferred tax assets (liabilities) included in the Consolidated Balance Sheets are as follows:Thousands of


Current assets - Deferred tax assets ¥3,766 ¥4,066 $38,268Non-current assets - Deferred tax assets 12,484 12,490 117,553Current liabilities - Other (7) (46) (433)Non-current liabilities - Deferred tax liabilities (126) (115) (1,082)

Note: Revisions to Deferred Tax Assets and Deferred Tax Liabilities Due to Change in Corporate Income Tax RateIn the United States, the Tax Cuts and Jobs Act of 2017 was enacted on December 22, 2017. Federal corporate taxes will be reduced starting from fiscal years on and after January 1, 2018. As a result of this tax reform, the corporate tax rate imposed on the Company’s US subsidiaries will go from 35% to 21%and deferred tax assets (amount after deduction of deferred tax liabilities) decreased by ¥1,833 million (US$17,252 thousand)and the adjustment for corporate and other taxes increased by ¥1,913 million (US$18,005 thousand), respectively.

19. Contingent Liabilities Thousands of

Millions of yen U.S. dollarsGuarantees for loans borrowed / notes issued by: 2017 2018 2018Employees ¥220 ¥184 $1,732Fujikura Cabos Para Energia e Telecomunicações Ltda. 1,934 2,519 23,708ProCable Energia e Telecomunicações S.A. 2,923 2,390 22,494Other unconsolidated subsidiaries and affiliates 670 528 4,969

¥5,749 ¥5,622 $52,913


20. Derivative Instruments(a) Derivative instruments not accounted for under hedge accounting(1) Foreign forward exchange contractsAt March 31, 2017 Millions of yen

2017Sell USD ¥7,279 - ¥46 ¥46 YEN 348 - (4) (4)

Others 153 - (1) (1)Buy USD 20,921 885 (335) (335) YEN 424 - (6) (6)

Others 218 - (5) (5) Total ¥29,345 ¥885 (¥307) (¥307)

At March 31, 2018 Millions of yen Thousands of U.S. dollars

2018Sell USD ¥6,643 - ¥99 ¥99 $62,522 - $932 $932 YEN 81 - 1 1 762 - 9 9

Others 104 - 2 2 979 - 19 19Buy USD 47,738 - (1,788) (1,788) 449,299 - (16,828) (16,828) YEN 402 - 0 0 3,784 - 0 0

Others 536 - 3 3 5,045 - 28 28 Total ¥55,505 - (¥1,682) (¥1,682) $522,400 - ($15,831) ($15,831)

(2) Interest Rate SwapsAt March 31, 2017 N/A

At March 31, 2018 N/A

(3) Commodity Futures ContractsAt March 31, 2017 Millions of yen

2017 Sell ¥2,996 ¥ - ¥25 ¥25 Buy 1,890 83 119 119 Total ¥4,887 ¥83 ¥144 ¥144


2018

Notionalamount

Notionalamount to be

settled inmore thanone year

Fairvalue

Gain (loss)

Notionalamount



Fairvalue

Gain (loss)

Sell ¥3,195 ¥ - ¥69 ¥69 $30,071 $ - $649 $649 Buy 4,717 1,035 (55) (55) 44,395 9,741 (518) (518) Total ¥7,913 ¥1,035 ¥14 ¥14 $74,475 $9,741 $132 $132

(b) Derivative instruments accounted for under hedge accounting(1) Foreign forward exchange contractsAt March 31, 2017 Millions of yen

2017Accounted for combined with the accounts designated as hedged items (allowed under JGAAP) Accounts receivable, trade Sell USD ¥26,029 ¥ - ¥ - EUR 966 - -

Accounted for by the method in the principle Accounts receivable, trade Sell USD 12,448 1,483 189 EUR 641 122 7 Accounts payable, trade Buy USD 291 - (4) Others 61 - 0Total ¥40,439 ¥1,606 ¥192

Notionalamount



Fairvalue



Fairvalue

Gain (loss)

Notionalamount



Fairvalue

Gain (loss)

Notionalamount



Fairvalue

Gain (loss)

Notionalamount

Notionalamount



Fairvalue

Gain (loss)


2018Accounted for combined with the accounts designated as hedged items (allowed under JGAAP) Accounts receivable, trade Sell USD ¥26,189 ¥ - ¥ - $246,485 $ - $ - EUR 1,311 - - 12,339 - -

Accounted for by the method in the principle Accounts receivable, trade Sell USD 11,223 276 352 105,628 2,598 3,313 EUR 1,117 24 (15) 10,513 226 (141)Total ¥39,842 ¥300 ¥337 $374,984 $2,824 $3,172

(2) Interest Rate SwapsAt March 31, 2017 Millions of yen

2017Accounted for by the simplified method allowed under JGAAPInterest Rate Swaps Long-term borrowings Pay Fixed interest / Rec. Floating interest ¥77,773 ¥60,851 ¥ -Total ¥77,773 ¥60,851 ¥ -


2018

Accounted for by the simplified method allowed under JGAAPInterest Rate Swaps Long-term borrowings Pay Fixed interest / Rec. Floating interest ¥74,249 ¥67,041 ¥ - $698,814 $630,974 $ -Total ¥74,249 ¥67,041 ¥ - $698,814 $630,974 $ -

(3) Commodity Futures ContractsAt March 31, 2017 Millions of yen

Notionalamount

More than oneyear of Notional

amount

Fairvalue

2017

Accounted for by the method in the principleCommodity Futures Contracts Raw materials Sell ¥3,630 ¥ - 630Total ¥3,630 ¥ - ¥630


2018

Accounted for by the method in the principleCommodity Futures Contracts Raw materials Sell ¥8,125 ¥ - (¥128) $76,471 $ - ($1,205)Total ¥8,125 ¥ - (¥128) $76,471 $ - ($1,205)

21. Supplementary Information for the Consolidated Statements of Changes in Net AssetsFor the Year Ended March 31, 2017(a) Type and number of outstanding shares

Year ended March 31, 2017

Type of sharesIssued stock: Common stock (*1) TotalTreasury stock: Common stock (*1)(*2) 14,280 65,000 Total 14,280 65,000(*1) The decrease of 65,000 thousand shares during the year is due to the retirement of treasury stock.(*2) Treasury stock increased due to the repurchase of 14,280 thousand shares.

(b) Dividends (1) Dividends paid to shareholders:

Amount Amount

Date of approval (Millions ofyen)

per share(Yen)

June 29, 2016 Common ¥1,198 ¥4.0stock

October 28, 2016 Common ¥1,438 ¥5.0stock

Notionalamount


amount

Fairvalue

Notionalamount

More than oneyear of

Notionalamount

Fairvalue

Notionalamount


amount

Fairvalue

Notionalamount


amount

Fairvalue

Notionalamount


Notionalamount

Fairvalue

Notionalamount


amount

Fairvalue

Notionalamount


Notionalamount

Fairvalue

Thousands of sharesBalance at Increase in shares Decrease in shares Balance at

beginning of year during the year during the year end of year

360,863 - 295,863360,863 - 295,863

65,00065,000

61,327 10,61061,327 10,610

Resolutionapproved by

Type ofshares

Shareholders'cut-off date

Effectivedate

Annual general meeting March 31, 2016

June 30, 2016of shareholders

Board of directors September 30, 2016

December2, 2016


(2) Dividends with a shareholders' cut-off date during the current fiscal year but an effective date subsequent to the current fiscal year-end:Amount Amount


per share(Yen)

June 29, 2017 Common ¥1,426 Retained ¥5.0stock earnings

For the Year Ended March 31, 2018(a) Type and number of outstanding shares

Year ended March 31, 2018

Type of sharesIssued stock: Common stock TotalTreasury stock: Common stock (*1)(*2)(*3) Total(*1) The 1,058 thousand share increase in common shares of treasury stock are mainly attributable to the increased acquisition of shares of the stock-based compensation plan for the Company’s directors.(*2) The 1,056 thousand share decline in common shares of treasury stock are mainly attributable to the sale of shares for the stock-based compensation plan for the Company’s directors.(*3) The number of common shares of treasury stock at the end of the fiscal year under review are included in the 1,056 thousand shares of Fujikura stock held in the trust account for the stock-based compensation plan for directors.

(b) Dividends (1) Dividends paid to shareholders:

Amount Amount Amount Amount


(Thousands ofU.S. dollars)

per share(Yen)

per share(U.S. dollars)

June 29, 2017 Common ¥1,426 $13,421 ¥5.0 $0.05stock

October 27, 2017 Common ¥2,004 $18,861 ¥7.0 $0.07stock

Note: The total dividend payout approved by the Board of Directors at the October 27, 2017 meeting includes 7 million yen in dividends for the shares in the trust account for the stock-based compensation plan for directors.

(2) Dividends with a shareholders' cut-off date during the current fiscal year but an effective date subsequent to the current fiscal year-end:Amount Amount Amount Amount


(Thousands ofU.S. dollars)

per share(Yen)

per share(U.S. dollars)

June 28, 2018 Common ¥2,004 $18,861 Retained ¥7.0 $0.07stock earnings

Note: The total dividend payout approved by the Annual general meeting of shareholders at the June 28, 2018 includes 7 million yen in dividends for the shares in the trust account for the stock-based compensation plan for directors.

22. Investment and Rental PropertyThe Companies own office buildings including land for rent in Tokyo and other districts. Profits generated from these investments and rental properties were ¥4,626 million and ¥5,487 million (US$51,642 thousand) for the fiscal years ended March 31, 2017 and 2018, respectively. The majority of rental revenues were recorded in Net sales and majority of rental costs were recorded in Cost of sales in the Consolidated Statements of Income.Book value, increase and decrease during the year and fair value of the investment and rental property at March 31, 2017 and 2018 are as follows:

For the Year Ended March 31, 2017

Millions of yen

Amounts in the Consolidated Balance Sheets (*1)Balance at beginning Increase and decrease in Balance at end Fair value at end

of the year property during the year (*2) of the year of the year (*3)¥40,187 ¥7,216 ¥47,404 ¥114,775

(*1) Amounts in the Consolidated Balance Sheets are computed based on acquisition costs after deducting accumulated depreciation and impairment charges. (*2) The primary increase in property during the year is the acquisition of assets for rent in the amount of ¥9,060 million.(*3) Fair value at end of the year is primarily estimated by the Company based on "Real Estate Appraisal Standards".

For the Year Ended March 31, 2018

Millions of yen


of the year property during the year (*2) of the year of the year (*3)¥47,404 (¥2,834) ¥44,569 ¥109,033



of the year property during the year (*2) of the year of the year (*3)$446,155 ($26,673) $419,473 $1,026,193

(*1) Amounts in the Consolidated Balance Sheets are computed based on acquisition costs after deducting accumulated depreciation and impairment charges. (*2) The primary decrease in property during the year is the depreciation of office buildings for rent in the amount of ¥1,920 million (US$18,071 thousand).(*3) Fair value at end of the year is primarily estimated by the Company based on "Real Estate Appraisal Standards".


Type ofshares Paid from Shareholders'

cut-off dateEffective

date



Thousands of sharesBalance at Increase in shares Decrease in shares Balance at

beginning of year during the year during the year end of year

295,863 - - 295,863295,863 - - 295,863

10,610 1,058 1,056 10,61210,610 1,058 1,056 10,612

Paid from Shareholders'cut-off date


Type ofshares

Shareholders'cut-off date

Effectivedate



Effectivedate



Board of directors September 30, 2017

December4, 2017


Type ofshares

23. Segment Information(Segment Information)(a) Summary of reporting segments

The Group's reporting segments are components of the Group for which separate financial statements are available that are regularly monitoredby the management in deciding how to allocate resources and in assessing performance.The Group classifies its businesses into 4 segments, which are "Power & Telecommunication Systems Company", "Electronics Business Company", "Automotive Products Company", "Real Estate Business Company", considering similarities in production methods, production process, applications and sales methods.

Definitions of the four segments for the years ended March 31, 2017 and 2018 are as follows: The Power & Telecommunication Systems Company deals with Power cables, Telecommunication cables, Aluminum wires, Enameled wires, Optical fibers, 　Optical fiber cables, Telecommunication components, Optical components, Fiber optic equipment, Network equipment, Installation, etc. The Electronics Business Company deals with Flexible printed circuits, Electronic wiring, HDD components, Various kinds of connectors, etc. The Automotive Products Company deals with Automotive wire harnesses, Accessories & Installation, etc. The Real Estate Business Company deals with Real estate rental, etc.

(b) Basis of calculation for sales, profits or losses, assets, liabilities and other items by reporting segmentsAccounting policy and method used for segment information by reporting segments are identical to those as described in "2. Summary of Significant Accounting Policies" above. Profits by reporting segment are based on operating income as stated in the Consolidated Statements of Income.

Note: Changes to the depreciation method for property, plant and equipment and revisions to useful livesIn accordance with the New Accounting Pronouncements and Changes in Accounting Policies, starting from the fiscal year under review, we revised our depreciation method for property, plant and equipment and reviewed the useful lives for some of these property, plant and equipment. Taking this into account, in contrast with our previous depreciation method, the increase in segment profit in the fiscal year under review is as follows:Power & Telecommunication Systems Company ¥1,822 million (US$17,148 thousand), Electronics Business Company ¥339 million (US$3,191 thousand), Automotive Products Company ¥132 million (US$1,242 thousand), Real Estate Business Company ¥231 million (US$2,174 thousand), and Other ¥66 million (US$621 thousand).

(c) Information on sales, profit or loss, assets, liabilities, and other items by reporting segment

For the year ended March 31, 2017

Millions of yenPower &

Telecommuni- Other Adjustment Consolidated cation Systems (*1) (* 2,3,4) total

Reporting segments Company

Sales to outside customers ¥349,656 ¥156,737 ¥133,107 ¥10,183 ¥4,111 ¥653,795 ¥ - ¥653,795Inter-segment sales 442 268 35 - 25 772 (772) -Total sales 350,098 157,005 133,143 10,183 4,137 654,567 (772) 653,795Segment profit (loss) 20,366 7,557 2,569 4,661 (924) 34,230 - 34,230Segment total assets 236,170 131,658 89,137 42,833 5,154 504,954 83,672 588,626

Depreciation and amortization 9,222 9,725 3,834 1,814 423 25,020 2,568 27,589Impairment losses 1 25 - - - 27 - 27Increase in property, plant and equipmentand intangible assets ¥11,454 ¥15,063 ¥7,500 ¥8,545 ¥368 ¥42,933 ¥2,689 ¥45,623

Notes:(*1) "Other" includes new businesses to launch which are excluded from the aforementioned 4 segments.(*2) Adjustment of ¥83,672 million in "Segment total assets" represents common assets not allocated to each reporting segment in the amount of ¥111,221 million and elimination of inter-segment transactions in the amount of ¥(27,549) million. Common assets mainly consisted of assets related to investment securities, research and development and administrative divisions of the Company.(*3) Adjustment of ¥2,568 million of "Depreciation and amortization" represents depreciation and amortization associated with common assets not allocated to each reporting segment.(*4) Adjustment of ¥2,689 million of "Increase in property, plant and equipment and intangible assets" represents an increase in common assets not allocated to each reporting segment.





Sales to outside customers ¥371,790 ¥195,982 ¥157,055 ¥10,962 ¥4,261 ¥740,052 ¥ - ¥740,052Inter-segment sales 540 255 43 - 8 848 (848) -Total sales 372,331 196,238 157,099 10,962 4,269 740,901 (848) 740,052Segment profit (loss) 22,440 10,441 (3,174) 5,501 (864) 34,343 - 34,343Segment total assets 261,599 150,013 110,274 43,332 4,712 569,933 68,121 638,055

Depreciation and amortization 7,950 10,293 4,345 1,990 271 24,851 2,018 26,870Impairment losses 2 348 424 - 0 775 - 775Increase in property, plant and equipmentand intangible assets ¥20,944 ¥10,386 ¥5,975 ¥2,461 ¥192 ¥39,960 ¥2,627 ¥42,588

Thousands of U.S. dollarsPower &



Sales to outside customers $3,499,200 $1,844,536 $1,478,165 $103,172 $40,104 $6,965,195 $ - $6,965,195Inter-segment sales 5,082 2,400 405 - 75 7,981 (7,981) -Total sales 3,504,292 1,846,946 1,478,579 103,172 40,179 6,973,186 (7,981) 6,965,195Segment profit (loss) 211,200 98,268 (29,873) 51,774 (8,132) 323,228 - 323,228Segment total assets 2,462,108 1,411,887 1,037,873 407,831 44,348 5,364,075 641,139 6,005,224

Depreciation and amortization 74,824 96,875 40,894 18,729 2,551 233,892 18,993 252,894Impairment losses 19 3,275 3,991 - 0 7,294 - 7,294Increase in property, plant and equipmentand intangible assets $197,120 $97,751 $56,235 $23,162 $1,807 $376,094 $24,725 $400,828

Notes:(*1) "Other" includes new businesses to launch which are excluded from the aforementioned 4 segments.(*2) Adjustment of ¥68,121 million (US$641,139 thousand) in "Segment total assets" represents common assets not allocated to each reporting segment in the amount of ¥99,523 million (US$936,687 thousand) and elimination of inter-segment transactions in the amount of ¥(31,401) million (US$(295,539) thousand). Common assets mainly consisted of assets related to investment securities, research and development and administrative divisions of the Company.(*3) Adjustment of ¥2,018 million (US$18,993 thousand) of "Depreciation and amortization" represents depreciation and amortization associated with common assets not allocated to each reporting segment. 有形無形調整

(*4) Adjustment of ¥2,627 million (US$24,725 thousand) of "Increase in property, plant and equipment and intangible assets" represents an increase in common assets not allocated to each reporting segment.

ElectronicsBusinessCompany

AutomotiveProductsCompany

Real EstateBusinessCompany

Total




Total




Total


(Related information)(a)Geographical segment information

SalesMillions of yen

2017 Japan U.S. China Others TotalSales to external customers ¥256,000 ¥124,401 ¥96,991 ¥176,401 ¥653,795

Property, plant and equipmentMillions of yen

2017 Japan Thailand China Others TotalProperty, plant and equipment ¥99,921 ¥50,880 ¥17,976 ¥26,505 ¥195,283

SalesMillions of yen Thousands of U.S. dollars

2018 Japan U.S. China Others Total Japan U.S. China Others TotalSales to external customers ¥277,267 ¥141,310 ¥106,642 ¥214,832 ¥740,052 $2,609,572 $1,329,976 $1,003,689 $2,021,948 $6,965,195

Property, plant and equipmentMillions of yen Thousands of U.S. dollars

2018 Japan Thailand China Others Total Japan Thailand China Others TotalProperty, plant and equipment ¥112,982 ¥52,013 ¥20,083 ¥26,208 ¥211,288 $1,063,360 $489,534 $189,016 $246,664 $1,988,593

(b) Major customer informationThis information has been omitted as there were no customers to whom the Group individually recorded external sales representing 10% or more of consolidated net sales for the years ended March 31, 2017 and 2018.

(c) Goodwill information



Telecommuni- cation Systems

Reporting segments CompanyAmortization ¥3,541 ¥4 ¥ - ¥ - ¥3,545Unamortized goodwill 7,119 4 - - 7,123




Reporting segments CompanyAmortization ¥2,614 ¥4 ¥ - ¥ - ¥2,618Unamortized goodwill 4,236 - - - 4,236

Thousands of U.S. dollarsPower &


Reporting segments CompanyAmortization $24,602 $38 $ - $ - $24,640Unamortized goodwill 39,868 - - - 39,868




Total




Total




Total

24. Related Parties (Related party transactions) The tables below summarize the related party transactions with unconsolidated subsidiaries and affiliated companies accounted forusing the equity method for the year ended March 31:2017 (Millions of yen)

Relationship Name ofcompany Location Paid-in-

CapitalDescription of

business

Share ofvoting rights

(%)

Relationswith related

parties

Description oftransaction

Amount oftransactions

(Note 5)

Financialstatementline-item

The fiscal year-end balance

(Note 5)Affiliatedcompany

VISCASCorporation

Shinagawa,Tokyo

10

Directlyowned(50.0%)

Supply of rawmaterials withcharge (Note1)

3,273

Other currentassets

29

Guarantees(Note 2) 130 - -

Loan(Note 4) -

Long-termloansreceivable

8,071

2018



business


(%)


parties



(Note 5)



(Note 5)

Unconsolidatedsubsidiaries

OPTOENERGYInc.

Sakura,Chiba ¥489 million

Power &Telecommuni‐cationSystemsCompany


Supply of rawmaterialsfrom theCompany,Interlockingdirectorate


¥793 million - -


ProCable Energiae Telecomunicações S.A.

Brazil R$55,454thousand



Guarantees Guarantees(Note 2)

¥3,983million

(Note 3)- -

Affiliatedcompany

VISCASCorporation Ota, Tokyo ¥10 million



Financialassistance

Loan(Note 4) -


¥6,746 million

2018 Thousands of U.S. dollars)



business


(%)


parties



(Note 5)



(Note 5)


OPTOENERGYInc.

Sakura,Chiba 4,602



Supply of rawmaterialsfrom theCompany,Interlockingdirectorate


7,464 - -


ProCable Energiae Telecomunicações S.A.

Brazil 16,780



Guarantees Guarantees(Note 2)

37,487(Note 3) - -

Affiliatedcompany

VISCASCorporation Ota, Tokyo 94



Financialassistance

Loan(Note 4) -


63,492

Terms and conditions of the above transactions and the policy to determine the terms and conditions:(Note) 1. For supply of raw materials with charge, terms and conditions were determined with consideration of market prices.

2. In the previous fiscal year, the Company provided guarantees for borrowings from banks and for fulfillment of contracts.In the current fiscal year, the Company provided guarantees for fulfillment of contracts.

3. Taking into consideration the year-end balance for debt guarantees, ¥1,593 million (US$14,992 thousand) was recorded to the reserve for Provision for loss on guarantees.

4. The Group utilizes a cash management system to control treasury among the group companies. Only the balance at the end of the fiscal year is disclosed as it is difficult to calculate the total amount for each transactionusing the cash management system. Note that interest rates are determined based on the market interest rates.

5. Consumption taxes are not included in the amount of transactions but are included in the fiscal year-end balance.

Supply of rawmaterialsfrom theCompany,Guarantees, Financialassistance



25. Per Share InformationYen U.S. dollars

Per share: 2017 2018 2018Net income per share- basic ¥44.61 ¥64.36 $0.606Net income per share- fully diluted (*1) - - -Cash dividends 10.00 14.00 0.132Net assets per share ¥710.68 ¥768.83 $7.236

(*1) As the Company does not have any instruments that have dilutive effect, the Company has not disclosed net income (loss) per share-fully diluted data.

Note:In the fiscal year under review, the Company introduced a stock-based compensation plan by means of a trust for the Company’s directors. For the calculation of Net assets per share, the 1,056 thousand shares held in the trust account were included in the treasury stock and deducted from the total number of outstanding shares at the end of the fiscal year. In addition, for the calculation of Net income per share, 704 thousand shares, which was the average number of shares held in the trust account during the fiscal year under review were included in the treasury stock, which are deducted when calculating the average number of outstanding shares during the period.


Basis for computation of per share data: 2017 2018 2018

Profit attributable to owners of parent ¥12,900 ¥18,359 $172,791Profit attributable to common shareholders ¥12,900 ¥18,359 $172,791

Thousands of shares2017 2018

Number of weighted average shares 289,205 285,251

26. Subsequent EventsThere are no significant subsequent events.

EMEA1 Fujikura Europe Ltd.2 Fujikura Automotive Europe GmbH3 Fujikura Automotive Europe, S.A.U.4 Fujikura Automotive Ukraine Lviv, LLC5 Fujikura Automotive Russia Cheboksary LLC6 Fujikura Automotive Romania S.R.L.7 Fujikura Automotive MLD S.R.L.8 Fujikura Automotive Morocco Tangier, S.A. Fujikura Automotive Morocco Kenitra, S.A.

Thailand9 Fujikura Electronics (Thailand) Ltd. DDK (Thailand) Ltd. Fujikura Automotive (Thailand) Ltd.

Southeast Asia0 Fujikura Federal Cables Sdn. Bhd. Fujikura Asia (Malaysia) Sdn. Bhd.q Fujikura Asia Ltd.w Fujikura Fiber Optics Vietnam Ltd. DDK VIETNAM Ltd. Fujikura Electronics Vietnam Ltd.e Fujikura Automotive Vietnam Ltd.r PT Fujikura Indonesia

Chinat Fujikura Zhuhai Co., Ltd.y Fujikura Automotive Guangzhou Co., Ltd. u Fujikura Hong Kong Ltd.

i Fujikura Fiber-Home Opto-Electronics Material Technology Co., Ltd.

o Fujikura (China) Co., Ltd. Fujikura Electronics Shanghai Ltd. Fujikura Shanghai Optical Components Co., Ltd. DDK (Shanghai) Co., Ltd. Fujikura Hengtong Aerial Cable System Ltd.

Koreap Fujikura Korea Automotive Ltd.

Indiaa Fujikura Automotive India Private Ltd.

Americass Fujikura America, Inc.d Fujikura Automotive Mexico S. de R.L. de C.V.f Fujikura Automotive America LLC.g America Fujikura Ltd. h Fujikura Automotive Paraguay S.A.j Fujikura Cabos Para Energia e Telecomunicacoes Ltda

Japan㉘ DDK Ltd. Fujikura Automotive Asia Ltd.㉙ Nishi Nippon Electric Wire & Cable Co., Ltd.

Global Network

h

6

12

5

4

s

da

g

j

f

p ㉘㉙oi

y ut

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ew

0q

9

3

8

7

Investor Information

As of March 31, 2018

Company NameEquity Ownership

Percentage, IncludingIndirect Ownership

Paid-in Capital(Million) Major Line of Businesses

Fujikura Dia Cable Ltd. 70.0% ¥5,400 Electric wires and cables

Nishi Nippon Electric Wire & Cable Co., Ltd.

60.7% ¥960 Electric wires and cables and optical cables

Shinshiro Cable Co, Ltd. 70.0% ¥333 Electric wires and cables

AFL Telecommunications LLC. 100.0% US$3OPGW, optical cables, optical fusion splicers, optical connection parts and telecommunications related work

DDK Ltd. 99.8% ¥100 Connectors

Fujikura Electronics (Thailand) Ltd. 100.0% THB11,552 FPCs and electronic components

Fujikura Electronics Shanghai Ltd. 100.0% RMB97 FPCs

Fujikura Automotive Asia Ltd. 100.0% ¥1,772 Wire harnesses for automobiles

Fujikura Automotive Europe S.A.U. 100.0% EUR10 Wire harnesses for automobiles

Fujikura Automotive America LLC. 100.0% US$3 Wire harnesses for automobiles

■ Major Shareholders As of March 31, 2018

Number ofShares Held(Thousands)

Ratio ofShareholding

(%)

The Master Trust Bank of Japan, Ltd. (Trust Account) 26,769 9.35

Japan Trustee Services Bank, Ltd. (Trust Account) 26,363 9.20

Mitsui Life Insurance Company Limited 10,192 3.56

Sumitomo Mitsui Banking Corporation 8,456 2.95

The Shizuoka Bank, Ltd. 7,713 2.69

Japan Trustee Services Bank, Ltd. (Sumitomo Mitsui Trust Bank, Limited Retirement Benefit Trust Account) 6,777 2.37

Dowa Metals & Mining Co., Ltd. 6,563 2.29

JP MORGAN CHASE BANK 385632 6,530 2.28

Fujikura Employees Shareholding Association 4,656 1.63

Japan Trustee Services Bank, Ltd. (Trust Account 5) 4,563 1.59

Notes: 1. The numbers presented in “Number of shares held” are based on the list of shareholders.2. Although the Company owns 9,451,530 shares of treasury stock, this is excluded from the above table.3. The percentage values presented in “Percentage of total shares issued” are calculated excluding treasury stock.

■ Head Office 1-5-1, Kiba, Koto-ku, Tokyo 135-8512, Japan URL: www.fujikura.co.jp/eng

■ Year of Foundation 1885

■ Date of Incorporation March 18, 1910

■ Common Stock Authorized: 1,190,000,000 sharesIssued: 295,863,421 shares Capital: ¥53,075 million

■ Number of Shareholders 28,997

■ Independent Auditors PricewaterhouseCoopers Aarata

■ Further Information For further information on this Annual Report,please contact the Investor Relations Group at the Head Office.

■ Contact Investor Relations Group Tel: +81-3-5606-1112 Fax: +81-3-5606-1501 E-mail: [email protected]

Main Consolidated Subsidiaries


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